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 efforttrading 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.
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To Airline Executives:
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!
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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.
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