Global Vacation Group Names New Management Team, Reports Third Quarter Results.

Business Editors

WASHINGTON--(BUSINESS WIRE)--Nov. 3, 2000

Ronald Letterman Elected President and CEO, Debbie Lundquist, CFO

Global Vacation Group, Inc. (NYSE: GVG), one of the largest U.S. providers of customized vacation products, today announced new management and reported results for the quarter ended September 30, 2000. The company announced the election of its vice chairman, Ronald M. Letterman, CTC, to the additional offices of president and chief executive officer. He also will continue to serve as the CEO of the company's Classic Custom Vacation brand. He replaces Raymond E. List, who served as interim chief executive officer and will continue to act as a consultant to the company.

The company also announced the election of Debbie A. Lundquist to the offices of executive vice president and chief financial officer. Lundquist formerly was Global Vacation Group's vice president and corporate controller, and chief financial officer of the company's Classic Custom Vacations brand. She replaces Jay Stuart, who has resigned to pursue other interests. The company also announced that it is relocating its headquarters to Classic Custom Vacations' facilities in San Jose, Calif. and will close its Washington, D.C. office by year end.

"The board of directors conducted an extensive search, both internally and externally, and found Ron Letterman to be the best person to lead the company's next phase of growth," said Frederic V. Malek, GVG chairman. "He has led our Classic Custom Vacations brand to double-digit annual revenue growth over the past three years and has in-depth knowledge of our industry and all of our operating units. The board has the utmost confidence in his ability to lead our company."

With 30-plus years of travel industry experience, Letterman is a nationally recognized industry expert and frequent speaker. Prior to joining Classic, he was president of Carlson Travel Network, where he was responsible for more than 1,000 travel agency locations and Carlson's wholesale tour operation. Earlier in his career, Letterman served as vice president and general manager of Destination Services USA for American Express.

"Debbie Lundquist has in-depth operational and financial experience and was the right choice to move into the CFO position. She joined Classic Custom Vacations in 1996, is thoroughly familiar with Global's operations and has played a major role in our restructuring," said Malek. "Jay Stuart's financial stewardship was important during this transitional period, and we wish him well."

Prior to joining Classic Custom Vacations, Lundquist was vice president, finance, for The Gap, the national clothing retailer, where she was responsible for a number of financial and operational units and oversaw 250 employees. A Certified Public Accountant, she began her career with the public accounting firm of Ernst & Young.

Third Quarter Results

For the third quarter, including a previously announced one-time restructuring charge of $38.4 million, GVG reported a net loss of $38.1 million, or $2.64 per share. Excluding the effect of the restructuring charge and approximately $1.6 million of related non-recurring operating expenses also incurred during the quarter, the company's pre-tax income improved 158 percent to $2.0 million for the quarter, compared to $0.8 million for the same period a year earlier. Net revenues for the quarter decreased 2 percent to $40.6 million, compared to $41.6 million for the same period a year earlier. The decrease in revenue was due, in part, to the restructuring of the company's Vacations by Globetrotters products.

"Our Classic Custom Vacations brand had another exceptional quarter, with net revenues up nearly 20 percent for the three months as compared to the prior year," Letterman said. "Classic continues to show strength in its core Hawaii products and exceptional growth in its Caribbean, Mexico and Europe products. To accommodate its growth and the additional business from former Vacations by Globetrotters customers, Classic has opened a satellite reservations center in Chicago."

In October, American Express recognized Classic for excellence in two categories at its annual awards meeting: Classic received the American Express Platinum Award for Best Wholesaler for the second year in a row and an Excellence Award for Sales Growth.

"We completed our writedown in the third quarter, which was slightly higher than our original $35 million estimate," Letterman added. He said that the additional charge included expenses associated with the assimilation of all of Globetrotters business under the Classic Custom Vacations brand and the anticipated closing of the company's Washington, D.C. office. "With the recent $27.5 million infusion from Three Cities Research, a private capital investment group earlier this year, we are well positioned for growth in 2001," he said.

Nine Months Results

For the nine months, the company reported a 6 percent increase in net revenues to $104.4 million, compared to $98.7 million for the first three quarters of 1999. Net loss, including the restructuring charge, was $43.1 million, or $3.00 per share for the first three quarters of 2000, compared to a net loss of $1.2 million, or $0.08 cents per share for the first nine months in 1999.

Global Vacation Group is a value-added provider of branded and private label vacation products and services. Global Vacation Group brands include Classic Custom Vacations, which creates customized vacation packages for U.S. travelers and Allied Tours, which creates and coordinates packages and tours for international travel wholesalers selling vacations to North America.

The matters in this press release include "forward looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are qualified by cautionary statements contained herein and in Global Vacation Group's filings with the Securities and Exchange Commission.

             GLOBAL VACATION GROUP, INC., AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except per share data)
                              (unaudited)


                          Three Months Ended      Nine Months Ended
                              September 30,         September 30,
                          2000          1999       2000       1999


Net revenues             $ 40,620   $ 41,557  $ 104,366   $ 98,727
Operating expenses         35,664     35,375     94,939     86,125

 Gross profit               4,956      6,182      9,427     12,602

General and administrative
 expenses                   3,198      3,610      8,041     10,196
Depreciation and
 amortization               1,488      1,799      5,232      4,223
Restructuring charge       38,382         -      38,382         -

 Income (loss) from
  operations              (38,112)       773    (42,228)    (1,817)


Other income (expense)
 Interest income              953        668      2,303      1,724
 Interest expense            (834)      (668)    (3,127)    (1,242)
 Other                         --         (7)        (1)        50

Total                         119         (7)      (825)       532


Income (loss) before income
 taxes and extraordinary
 item                     (37,993)       766    (43,053)    (1,285)

Income tax benefit
 (expense)                    (60)      (396)       (60)       386


Income (loss) before
 extraordinary item       (38,053)       370    (43,113)      (899)

Extraordinary item, net of
 income tax benefit
 of $144                      -           -          -        (257)


Net income (loss)       $ (38,053)     $ 370  $ (43,113)  $ (1,156)



Basic and diluted net income (loss) per common share:

                   `
Income (loss) per share
 before extraordinary
 item                     $ (2.64)    $ 0.03    $ (3.00)   $ (0.06)

Extraordinary item
 per share                     -          -          -       (0.02)


Basic and diluted net
 income (loss)
 per share                $ (2.64)    $ 0.03    $ (3.00)   $ (0.08)




Basic and diluted weighted
 average shares
 outstanding               14,393     14,473     14,393     14,550