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

June 3, 2003

Written by Bob Meyer, Editor of BarterNews

Hoteliers Use Barter To Build Name Recognition...Thereby Increasing Traffic

Despite predictions of a travel upturn, there is now little likelihood the hotel industry will see much improvement until at least 2005, according to PricewaterhouseCoopers.

Their study shows the average daily rate for a hotel room ($83.46) is at a trough right now. And hotels' annual revenue-per-available-room, at $19,619, is expected to be lower than it was in 2000 when it reached $19,840.

In the past month, every segment of the hotel industry from luxury to economy experienced a drop in revenue-per-available-room, according to Tennessee-based Smith Travel Research. With a recovery still out on the horizon, it behooves hoteliers to start promoting their properties with a greater effort—trading unsold rooms for advertising.

Barter advertising in the hospitality industry involves the exchange of unsold rooms for advertising. Unsold rooms are a perishable product that is lost when left unoccupied, and advertising, an essential expense for increasing occupancy, requires hard-earned cash to acquire.

The key to barter advertising is to turn unsold rooms into an asset by using them to pay for advertising.

Three main players are involved: the hotel that commits the unsold rooms; the barter company that provides the media on trade; the hotel's advertising agency that evaluates the quality of the media.

It is a misconception to think that there is always a direct connection between the advertising placed and the barter guest who ultimately uses the room credits. The advertising for which one barters is aimed at the markets usually used to increase occupancy. Barter guests brought to your property via the barter company represent corporations presently trading with the barter company.

Barter Advertising: Some Rules Of The Game

While the end result of advertising purchased via barter is the same as advertising acquired with cash, it is purchased differently. For the hotelier, it is important to understand how the buying process differs yet achieves the same result.

Just as you don't want your paying guests displaced with barter guests, media companies don't want to displace their cash advertisers. You or your agency must identify the media where you currently pay for advertising. Then it is the barter company's job to produce equivalent print and broadcast alternatives that are both "barterable" and meet or exceed your goals.

Getting "cleared" as a barter advertiser. If you are currently a cash advertiser with a particular publication, radio channel, or TV station the general rule is that you are ineligible to be a barter advertiser for one year.

However, depending on supply and demand some media companies will be flexible...especially if the barter advertising is incremental or mixed with cash. It is also an incentive if they know the only way you can increase the amount of business with them is through barter.

Next week: Making a pre-contract checklist before you negotiate, and what to expect from the barter company. The final segment the following week will conclude with a key element of the contract.

For information on The Barter Market Place click here.

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Memo To Airline Executives:
Want To Retain Ticket Price Integrity? Then It's Time To Barter!

Airline veteran Stephen Wolf, in a recent interview, discussed his 37-year career and where he sees the airline industry headed. It was obvious from his comments that unrealistic costs continue to plague much of the industry. At the same time low-cost competition is spreading...encompassing 55% of the domestic market, up from just 15% a few years.

Wolf says the industry is not going back to the robust fares and fare increases prior to September 11. Moreover, he contended that air travel is becoming a commodity which guarantees vicious price-cutting.

While no one is suggesting the airlines can increase their prices, dropping them continually isn't the answer either. Instead, they should be trading a percentage of tickets by moving them into the barter marketplace, where they could maintain the price integrity of their product!

Extraordinary Revealing Report - Click here.

Every barter company in the world is listed on our web site, click through to our global list of barter companies.

PLEASE NOTE: The Global List and the U.S. List of Barter Companies have been recently updated. Check out the new companies added, as well as changes made to the existing listings.

Get New Money-Making Ideas, and Valuable Contacts!

You can obtain these ideas and contacts in every every available back-issue of BarterNews.

• There are 76,000 restaurants in Los Angles county. Organized barter, i.e. the trade exchange concept, was introduced into Los Angeles in 1960 by BXI's Mac McConnell. Today, the exchanges in the L.A. area aggregately have less than 1/5 of 1% (156) of those restaurants as members.
  
  
• Have you signed up to receive a summary via e-mail of the Tuesday Report every week? If not, go to the top of this issue (right hand corner) to sign up!
  
  
• The New Jersey-based Bergen Record published a story on corporate barter, "Where Castoffs Are Gold." The paper visited and interviewed Frederick Fuest, COO of Active International in Pearl River (NY), and quoted John Kramer, CEO of Icon International in Stamford (CT).

  Noted in the article was Active's position as 10th largest worldwide buyer of media time and space in 2002, according to Ad Age magazine, with billings of $750 million.

  Others quoted in the May 23 article were Alan Elkin, Active International CEO and co-founder; Krista Vardabash, executive director of the International Reciprocal Trade Association; and Bob Meyer, publisher of BarterNews magazine.
  

• The Callaway Golf logo was the recipient of almost $300,000 worth of TV and print exposure that Annika Sorenstam received at the recent Colonial golf tournament. The National Television Impression Value Analysis reported that coverage of Sorenstam's first round saw Callaway's logo getting 11 minutes and 53 seconds of clear, in-focus exposure time.

  Figuring an advertising rate of $12,000 for 30 seconds, that time was worth $289,955 for Callaway. (The 11:53 was the longest logo time ever, breaking the previous mark of 9:53 held by Nike at the 1997 Masters when Tiger Woods won for the first time.)
  

• An article in the Boston Globe reports that Harvard Medical School operates with its doctors on a type of barter system. In return for the Harvard seal on their stationery and resumes (which helps physicians win patients, research grants, and speaking opportunities), doctors are required to teach and sit on committees.
  

• The latest American Customer Satisfaction Index, a quarterly consumer survey by the National Quality Research Center at the University of Michigan Business School, reports that American travelers are more satisfied with airlines and hotels than other travel related services.

  The prevailing theory among industry analysts is that airlines and hotels are finding it easier to cope with customer demands because bookings are lower due to the weakened economy. It's also possible that airlines and hotels are working harder to please, since they can ill afford to lose customers these days.