Chairman's Statement

With the advent of the Year of the Monkey, GlobalRes is celebrating its 10th anniversary amid high expectation and confidence that in the coming years, we will attain the status of market leader in the local and international travel industry.
Looking back on those early days from the beginning to the present day, GlobalRes has now earned its own entity and is enjoying high rating in this field. We have the sense of pride but remain complacent.

First Among Equals

In Hong Kong, GlobalRes has always been a pioneer in the travel industry. Among its many "firsts", GlobalRes was the first travel agent in 1996 to launch the internet hotel booking service for B2B in Hong Kong; the first to start on-line booking system connecting suppliers in Europe, North America, Australia, Asia, including Japan, Korea, Thailand, Taiwan, Singapore and the People's Republic of China.

The Year in Review -- Our Finest Hour

2003 was a trying year for the travel industry. The outbreak of SARS in Asia and Canada curbed international travel to its minimum. GlobalRes also unavoidably affected but our resilience and strong financial strength had eased us to weather the storm and our rebound was quick and sharp once the World Health Organization declared the region was taken out of its travel ban. It opened the windows of opportunities for GlobalRes to acquire the businesses of those which couldn't stand the heat. Our turf of the business have since grown in folds.

Throughout this period, the averaged hotel room reservations per month was around 10,000 room nights, booked through our on-line system and land-based outlets.

Air ticket sales are on the rise too ! With the opening of the China market and the citizens of China are allowed much greater access to travel abroad, GlobalRes expects leaps and bounds in both hotel and air ticket reservations.

In all, the outbreak of SARS cast a long shadow of gloom, but 2003 was our finest hour.

On the Path to Greater Success

Hong Kong has always been an international city with the best financial and tourism infrastructure in the region. In spite of China's opening up to the world, overseas businessmen still opt for Hong Kong as a staging point to do business or invest in China.

With the implementation of CEPA (Closer Economic Partnership Agreement) in which China accords favourable terms for Hong Kong products to gain access to the China market, China also relaxes its control of the movements of its people to visit Hong Kong and Macau. Towards the latter part of 2003, almost half of the total numbers of visitors were from China.

To date residents of 24 cities in 4 coastal provinces are permitted to visit Hong Kong individually. It roughly amounts to 94 million would be visitors alone. Also, residents of Beijing and Shanghai are granted this travel facility. In the long term, people throughout China will be allowed to visit Hong Kong.

China has a population of 1.3 billion. Should one in a hundred make a trip outside China, one would imagine how huge the tourist market would be and how much the tourist dollar would go around.

GlobalRes has been developing the hotel market in China for the past few years and has built an enormous and efficient on-line network of hotel reservations through the length and breadth in China. GlobalRes is now setting itself in the best position to capture the lion share of the market.

Networking in China

Since February 2004, GlobalRes has been appointed by Shanghai Airlines to be its sole supplier of package hotel rooms for its subsidiary, Shanghaiair Holiday, in Hong Kong and Macau. GlobalRes has been contracted by Shanghai Airlines to be the exclusive supplier of hotel rooms in the destinated cities. Shanghai Airlines is considered to be the best managed airlines in China and the expansion of its routes are open and unlimited. With close co-operation, the revenues derived for both parties are unlimited in the long run.

GlobalRes aims to enter into strategic partnership with at least 3 major Chinese Airlines in 2004 with the view to covering exclusive hotel room reservations and ticket sales in as many destinations as possible. By expanding its coverage, GlobalRes is confident that its business would be on the right path and its income would grow substantially.

GlobalRes also considers such partnership beneficial to the airlines and end-users as GlobalRes has been the best partners with over 6,000 hotels in 661 cities in 52 countries and the total number of hotels indirectly contracted through our wholesale alliance exceeded 20,000.
Building Specialized Private Label Network Infrastructure and Developing Strategic Alliance

To prepare for further expansion and to enhance its performance, GlobalRes is inaugurating its advanced G4 online hotel booking system with Shanghai Airlines and appoints Shanghaiair Holiday as the sole agent to use this system in Eastern China.

Shanghai Airlines is planning to deploy this system with its 1,500 sub-agents in Shanghai and in the provinces of Zhejiang and Jiangsu.
The G4 system is a private label on-line system developed and innovated by GlobalRes. The beauty of the system is that it does not only offer online portals, reservation platform, most competitive hotel room rates and real time confirmation but also it is equipped with a mark-up engine for wholesale travel agents to create differential margin on their sub-agents.

Users of our G4 system have recognized the practicability, reliability and flexibility of our private label system. We are pleased to report that the number of travel agents adopting and choosing to use our system is on the increase. One example is that the China Merchants International Travel , a state-owned enterprise, is using our G4 system in their 26 outlets in Shenzhen to cater and to provide efficient and economic service to their customers.

The private label system is another important source of revenue for GlobalRes. We are planning to sign up 500 wholesale travel agents in China and with their sub-agents which can run into 50,000 plus, GlobalRes private label system would be able to operate as the single largest online hotel booking chain in China by 2005.

Our Model Role " VISA" for Hoteliers and End Users

GlobalRes is the "VISA" or "MasterCard" for hotels around the world. For it is the system provider for hotels, airlines, travel agents and end users. Instead of charging all parties for using "VISA" or "MasterCard", we are offering all users of the system the choices of best rates and best services on a free-for-all basis.

Looking Ahead

There is not the slightest doubt that China's open door policy is going to continue. While millions of overseas visitors would take touring of China as their once-in-a-lifetime vacation, thousands of millions of Chinese would take their families to see those faraway places outside China.

Tourism in China is going to become a very lucrative business and with China approaching to become a developed nation and people become more affluent, GlobalRes will become one of its beneficiaries.

We have confidence that GlobalRes will be able to capture the lion share of the China market and will guarantee better returns to the company and the shareholders.

Wan Xiao lin
Chairman
June, 2004