Tuesday Report - January 8, 2002

The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

January 8, 2002

39% of Top 100 Advertisers Are Spending More To Promote

Quite a significant number, almost 40%, of top advertisers are spending more to promote their products and services than they did last year at this time.

Companies that have bumped up their marketing did so to gain a competitive edge or reach out to consumers amid the treacherous business environment. State Farm lead the list with a 112% increase in ad spending.

Others making dramatic boosts in spending included AT&T Wireless, Kia Motors, Pharmacia, Campbell Soup, Lowe's, Subway, Home Depot, and Fidelity Investments.

Small Hoteliers Under Pressure

PKF Consulting predicts that 36% of hotels, most of them small independent operations, won't be able to make debt payments from operations this year, double last year's rate.

Room revenues at hotels in major urban centers will be down 17.5% in the fourth quarter over the year-earlier period, and airline industry revenue should decline 30% for the same period--fourth quarter over year-earlier period.

And PricewaterhouseCoopers Hospitality Practice has announced that its expected 2002 occupancy rates for U.S. hotels to be 59.6%, suggesting a slower recovery than most have anticipated.

The Evolution Of Bruce Hovis, Long Time Trade Exchange Owner

One of our long time subscribers to BarterNews recently communicated an interesting story to us, which we're publishing here for you. Bruce Hovis has been in the barter business just short of 20 years. During that period he's built ten trade exchanges from scratch, and then subsequently sold them.

In November of 2000, having been diagnosed with a serious heart problem and working seven days a week, he decided to sell his Jamaican trade exchange located in Kingston and move into a less demanding arena.

Hovis is presently setting up a new company in Montego Bay which will handle only bookings for major all-inclusive resorts. Primarily, he's rolling the credits back into advertising, via major reciprocals he has in the U.S. and Canada.

Hovis says he's never been happier, carving out this new business in a tiny corner of the barter world. With eight resorts and six reciprocals he jokes that he may qualify for having the world's smallest trade exchange!

Hovis's philosophy is think small. "If you take care of the little things," he advises, "the big trades still come along...and they'll go much more smoothly."

Introduction Of Euro Will Benefit Business World

For the twelve countries of Europe now using the euro, an immediate huge plus is the elimination of transaction costs. (The money-changers' commissions previously charged every time one would buy francs, marks, etc.)

Indirectly it's a benefit for the US as well, because as our trading partners and allies become stronger, we're made stronger. Plus, competing world currencies will be an excellent guarantee that no single central bank can exploit its market power to the detriment of global commerce.

The introduction of the euro should also unleash a tidal wave of pent-up entrepreneurialism, giving smaller companies greater access to capital, talent and markets. One economist at the University of California, Berkeley, says the single currency could mean a doubling in volume of intra-European business!

We in the barter industry are impressed with the entrepreneurialism of our friends in Europe, and wish them the best with this bold new effort. As the barter industry matures and continues in its evolution, the development of several international barter currencies will strengthen and catapult the industry to a higher level.

Here And There. . .

Webmergers.com, a San Francisco-based company that's been tracking the internet economy, says the dot-com death toll doubled in 2001, with at least 537 Internet companies either going out of business or into bankruptcy court...this on top of the 225 dot-coms that perished during 2000. (It's estimated, however, that some 8,000 Internet companies remain in operation.)
Steven Bird, a general partner at Focus Ventures in Palo Alto (CA), expects more venture firms to shut down or stop investing this year as they run out of the big pools of capital raised in 2000 and find it hard to raise more money. Particularly hard hit will be new firms that managed to raise money in 1999 or 2000, but don't have a track record of performing in hard times.

He also contends that the worst is far from over in terms of failures of venture-backed start-ups. Thousands of companies raised two to three years' worth of money in 1999 or 2000, and many have little hope of raising more. As the money runs out more startups will die, and Bird says it'll get worse in the future as the number of failures will continue to increase.
Clothing designer Mossino Giannulli, who took ownership of some vacant land as partial payment for a home he sold two years ago, has "cash converted" the Bel-Air (CA) property by selling it to movie actor Nicolas Cage.
Jeffrey Sprecher, 46, founder of IntercontinentalExchange, a one year old electronic trading exchange based in Atlanta, is making a B-to-B exchange work...and his key to success is a barter deal.

Sprecher traded equity stakes in his year-old operation to energy and trading firms if they pledged to trade commodities over his system. He now handles $2.5 billion in commodity-trading daily, with revenues of around $120 million annually.
Steve Jobs, CEO of Apple Computer, received a salary of $1 in fiscal 2001, the same as in the past few years. However, in Apple's recent filing with the SEC it was noted that Jobs had been granted a bonus of a Gulfstream V airplane valued at about $90 million.
Patterson-UTI Energy has moved 450,000 shares of common stock and 325,000 warrants for 17 land-based drilling rigs and 28 rig-moving trucks. (Patterson trades at around $24 a share.)
The terrorist attacks have severely depressed world-wide merger and acquisition volume, producing only about $1.65 trillion of M&A deals in 2001, less than half the $3.4 trillion during 2000. (Many M&A deals are done on a pooling of interest basis, where little or no cash is exchanged.)
The Dallas Cowboys football team settled an unsolicited fax suit for $1.73 million! The Cowboys had hired a company to do a blast fax broadcast, to sell football tickets. Under the Federal Communications Commission's Telephone Consumer Protection Act it is illegal to send commercial faxes to consumers and businesses without their permission.
Trade exchange owners looking for the proven way to motivate their client base and stimulate more trade activity among their clients can obtain a copy of the 15-year-old, proven, informational marketing tool--The Competitive Edge newsletter.

The Competitive Edge is mailed to clients, prospects, etc. because BarterNews research, among the exchange owners, shows that only a third of the members of a trade exchange receive email. For more information E-mail bmeyer@barternews.com for a sample copy and details. (Be sure to include your complete mailing address in your e-mail...this is not an e-mail newsletter.)
Ernst & Young's Miami-based hospitality practice says that while less-expensive hotels are expected to recover most of their business by late this year, luxury hotels won't rebound until 2003.

The consulting group predicts that national hotel occupancy for 2002 will be 59.9%, not precipitously lower than the expected 60.1% of 2001 (after all the numbers are in), but nonetheless the lowest rate seen in decades.

We welcome your comments, questions, and observations.

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