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May 9, 2000

In this week's report. . .

  • More construction means more hotel rooms on trade
  • AOL and strike barter deal
  • Primedia revels in equity deals
  • BarterTrust moving into Latin America
  • Here and there. . .

Major Hotel Construction Bodes Well For Additional "Rooms On Trade"

There's a hotel building boom underway, and the barter industry will profit from it. Last year 161,900 hotel rooms went into construction, more than any year since 1986 when 156,000 were built. Thirteen years ago when that building boom occurred, the hotel industry hit the skids and it took until the mid-1990s to recover.

Overall occupancy rates are expected to drop from 63.3% in 1999 to 62% next year, and slightly lower in 2002. In the face of falling occupancies, hoteliers will be looking to squeeze more income from ancillary goods and services, i.e. phone calls, restaurants, business centers, meeting rooms, and health-spa charges.

And with additional vacancies more trading of rooms will occur as hotels seek to make up for the softening occupancy rates.

There will also be an acceleration in the renovation and redesign of hotels, to lure the business travelers who are mixing business and pleasure. Research shows that travelers want better lobbies with more of a business environment, similar to airline executive lounges.

Eyeballs For Equity...
AOL Strikes Barter Deal With #1 Realty Service controls more than 90% of the 1.47 million homes listed for sale on the Internet, and the company needs to get its message and content in front of the marketplace. So they just reached a 5-year expanded agreement to offer their real estate listings and home services on the world's largest online service, America Online (AOL).

The two companies inked a $200 million barter agreement wherein AOL gets a 5.6% stake in Homestore (3.9 million shares of stock) for offering the "exclusive provider" arrangement of homes for sales listings on AOL plus its CompuServe, Netscape Netcenter, and Digital City brands.

Last week AOL also picked up 3.5 million additional shares of stock from (See this issue's "Here and There...") Bottomline: AOL continues to trade on the strength of their No. 1 ISP (internet service provider) position.

Primedia Announces Several Equity Deals

Primedia is a media company focused on consumer and business-to-business audiences. Last year, 1999, sales were $1.7 billion. The company's key brands include Seventeen, New York, Chicago, Fly Fisherman, Channel One, Horticulture, Modern Bride, and American Baby.

The company has bartered 10 ads-for-equities deals from January through April 25, which are expected to generate and build a valuable equity portfolio for Primedia over time.

Primedia's CEO Tom Rogers revealed, "Our new partners include Interactive Learning Network related to Channel One; related to Automobile magazine; Umagic, related to several of our consumer magazines; Professional Buyer, related to our international construction titles; and MetaFarms, related to our internet unit, IndustryClick."

BarterTrust Eyes Latin America

The BarterTrust Network is expanding into Latin America by purchasing a majority stake in Barter Latin America, which also operates Barter Mexico,, headquartered in Mexico City.

Enrique Encisco Cordero and his sister Alicia Encisco Cordero are the founder of the company, both attended the IRTA convention in Vancouver last September where they met Mike Edelhart, president and CEO of BarterTrust.

Major clients of Barter Mexico include: Televisa, the largest media company in Mexico; Grupo MVS, a large cable, radio and online media operator; Casa Cuervo, the world's largest tequila manufacturer and producer of the Jose Cuervo Tequila; Digitel, the second-largest manufacturer of digital paging equipment in Mexico; PCTV, the largest cable operator in Mexico; restaurant chains Tony Roma's and TGI Friday's; Grupo Marti, the largest sports retailer and fitness center operator in Mexico; and Home Mart, Mexico's "Home Depot."

Other clients are: El Sitio, one of the three largest Latin American Internet portals; Seguros El Aguila (Eagle Insurance) and CP-Direct, a GE insurance company; El Economista, the second-largest daily newspaper in Mexico; Radio Acir, Radio Formula, and Grupo Imagen, three of the largest radio groups in Mexico; Cartonajes Estrella, one of the largest carton manufacturers; and Corev, a leading paint and construction finishes company.

Here and There. . .

  • Microcast Inc., the nation's highest capacity turnkey provider of internet video streaming services to the media industry, has hired Richard Forester to head up its advertising sales. Forester's background includes cable sales with ESPN, and barter syndication sales with Creative Sports Marketing.

  • AOL has restructured its relationship with For doing so, Drkoop bartered 3.5 million shares of its stock to AOL, in lieu of the normal cash payments due AOL for distributing its health information. (AOL is now the third largest shareholder with a 10% interest in

  • VCs are showing the money! Some $46.6 billion was committed to venture-capital funds last year, more than six times the $7.2 billion of five years earlier, according to Newark research firm Thomson Financial Securities Data. The first quarter of this year showed that web-related businesses accounted for an astonishing 84% of all dollars invested by venture-capital firms, compared with 71% in 1999, and 48% in 1998.

  • BigVine announced partnerships with MySoftware and MySoftware, a division of Click Action Inc., manufactures software for small business professionals that is used in direct marketing campaigns and management of mailing lists. Hotbiz offers business applications which include website design and hosting services.

  • Former ITEX President Graham Norris and former controller Cynthia Pfaltzgraff agreed to settle charges that they overstated the barter company's assets and earnings, and failed to disclose "sham" deals with other parties, according to the Securities and Exchange Commission.

    Both stated that they acted as part of a "broad-ranging fraudulent scheme" orchestrated by the founder of ITEX, Terry Neal, who still is in litigation with the SEC. Norris agreed to pay a $50,000 civil penalty. No financial penalty was imposed against Pfaltzgraff, based on her inability to pay, but she cannot practice as an accountant before the SEC for the next five years. ITEX traded for as much as $12.50 in January 1996. It now trades for 50-cents.

  • BarterCard Canada and Mutual Exchange Canada have merged, with BarterCard Canada becoming major stockholders in the company. The new entity will be renamed BarterCard Canada. BarterCard International will be providing working capital for a 16% equity position in the new entity, and the contract provides the right for BarterCard International to acquire 100% of the company in exchange for stock, upon BarterCard International's listing on the U.S. stock market.

    Mutual Exchange Canada services over 3,000 members from 7 offices. The merger brings together over 6,000 members and 8 offices throughout Canada, with the headquarters and centralized administration of 23 staff based in Toronto.


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