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

June 10 , 2003

Written by Bob Meyer, Editor of BarterNews

Part II 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.

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.

Make Checklist Before Negotiating

Once your hotel decides barter is a viable way to expand its advertising reach and/or reduce cash outlays on advertising, you need to negotiate a contract or written agreement with the barter company. A pre-contract checklist will include the following.

• The Advertising Agency. Since all barter advertising is placed through your advertising agency, be sure the agency shares your media schedule with the barter company.
  
  
• Media Buying Instructions. You and/or your advertising agency must send any and all media buying instructions to the barter company in writing, well before sitting down to negotiate a contract.
  
  
• The Media Schedule. This must be included as part of the contract with the barter company, usually as an exhibit.
  
  
• Shelf Life Of Room Credits. Don't leave this until last minute negotiations—it's a potential deal breaker. A shelf life of two or three years is reasonable. The shorter the time to use the room credits, the less value they have to the barter company.
  
  
• Guaranteed New Business. Make sure you have procedures clearly worked out with the barter company, so that none of your existing cash customers are displaced. Insist on providing written pre-approval of companies using the room credits, and give the barter company a list of your top accounts so they can avoid those companies. Specify the number of business days you need to research the volume business you may already be receiving from a proposed barter customer before you approve them.
  
  
• Internal Finance/Accounting Agreement. Be sure your accounting department agrees to a system for tracking the use of the room credits before you negotiate, and they should know their counterpart at the barter company.
  
  Accounting should also be in sync with your outside auditors and review with them Accounting Principles Board Opinion #29, "Accounting for Non-monetary transactions," and the later 1995 rulings on accounting for trade credit transactions (EITF 93-11) which relate to the tax laws applicable to the barter process.

What To Expect From The Barter Company

Once your checklist has been taken care of, you're ready to negotiate the key elements (to be listed in next week's issue) that will give both you and the barter company a maximum-benefit minimum-risk contract.

Although you should personally anticipate unforeseen business surprises, neither your attorney nor your accounting department should negotiate the media or room credit value issues. These are marketing issues, and barter programs are uniformly housed in the marketing department of the hospitality industry.

Next week: The final segment will conclude with the key elements of the contract.

For information on The Barter Market Place click here.

International Monetary Systems Acquires TradeMasters Of Louisville...Continuing Barter Industry Consolidation

International Monetary Systems (OTCBB:INLM) continues its relentless move forward in its proactive acquisition policies, acquiring the assets and client list of TradeMasters of Louisville, Kentucky.

Don Mardak, IMS president and CEO, says, "We're pleased with this acquisition in Kentucky. It's another step in our effort to consolidate the barter industry."

Veteran Barbara Martin, vice president in charge of the south central region of the company's Continental Trade Exchange barter network, will oversee the Louisville operation.

IMS Held Annual Meeting Of Shareholders

International Monetary Systems held their annual meeting at the Milwaukee Art Museum on Wednesday June 4, 2003. Named to a two-year term, expiring at the 2005 Annual Meeting were: Thomas Delacy, president and CEO of Independent Inspections, Wayne Emmer, president of Illinois Cement Co., and Dale Mardak, vice president of IMS.

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.

Atlanta Convention & Visitors Bureau Embraces Barter To Promote Area

What do you do when an advertising budget is cut from $420,000 to $165,000? Get creative, think out of the box...such was the thinking and actions of the Atlanta Convention and Visitors Bureau (ACVB).

ACVB turned to the city's resources—hoteliers, restaurants and various attractions like the Atlanta Braves, Six Flags Over Georgia, Stone Mountain Park, the Atlanta Zoo, and Atlanta's Botanical Gardens—which provided in-kind payments (free passes and tickets) this year, rather than the usual cash donations.

ACVB then went into action, putting together 900 packages. A typical prize would be a three-day trip to Atlanta for a family of four with tickets to four attractions.

These packages were then exchanged, along with some cash (from $165,000 cash budget), on a leveraged basis to acquire 2,500 television spots and 5,400 radio ads, valued at $1.5 million, and still growing. (Ads are also running in secondary markets, including Florida cities such as Jacksonville, Tallahassee, and Pensacola.)

The media moved unsold inventory, ACVB reminded millions of people about the delights of Atlanta, and the city's resources benefited from the traffic and greater awareness that were brought about through barter.

It's a good bet that other convention and visitors bureaus will take note, and soon follow suit.

Attention Trade Exchange Owners. . .It's GROW OR GO!

The magic bullet for growth is sales, always has been and always will be...yet the industry's overall growth is anemic. Why? Maybe it's because we're not providing on-going education about our unique way of doing business. Knowledge is always a pre-requisite to taking sustained action.

And for those newcomers, the lifeblood of an exchange, awareness of and understanding about the value of trading is even more important.

If you expect prospects to come aboard and your members to be more active traders, but you are perplexed when the results are less than you desire...there's a good reason. You must continually educate and motivate every month--month after month after month!

Such action is necessary because, let's face it, more cash business, not trade, is of paramount importance to your members. You must break through this "cash only" focus and redirect their thinking toward barter. Although most exchanges don't see the importance of doing so, many industry leaders are taking action and so can you.

As the owner of your own operation, there is an easy and inexpensive solution for moving forward...look into using The Competitive Edge newsletter. It's a camera-ready, 4-page, professionally written, informational marketing tool...available in PDF format as well as print. So regardless of how you reach your prospects and clients, you will have the necessary vehicle.

Written especially for you, the busy trade exchange owner, I am certain it will be the best investment you ever make.

For more information about The Competitive Edge, and how it can benefit you click here.

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• Several global airlines, already in alliances to sell tickets and buy in bulk, are now moving to jointly purchase jetliners. They will be aligning their normally diverse tastes for options such as cabin interiors, seating layout, and specially designed flight kitchens.

  In return for making planes easier to build, because of agreed upon similarities, manufacturers will grant the alliances discounts. (An added benefit is the resale value of the planes, as they would essentially be part of a fleet of identical aircraft attractive to future potential buyers.)

• 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!

• A former investment banking vice president at Goldman Sachs, John R. Talbott, has written a controversial book, The Coming Crash in the Housing Market. Talbott says the drop will start with the most expensive homes, and he warns of owning a home in a city where housing costs are more than three times the average family's income.

  (San Diego, San Francisco and Orange County (CA), all have average homes costing about six times annual family income. In Topeka (KS) and Peoria (IL), average homes cost only 1.6 times average family income.)

  According to Talbott, when interest rates rise residential prices will fall because fewer people will be able to buy homes. Foreclosure rates also will rise, leaving lenders with a glut on their hands. Talbott contends that Fannie Mae and Freddie Mac, the nation's largest mortgage lenders, have lost their way and are using finance gimmicks to keep their earnings up, thus becoming major contributors to the recent runaway in home prices.

• TV star, Melissa Joan Hart, is marrying Mark Wilkerson, and they're bartering for the entire wedding...ABC's Family Channel is picking up the tab in exchange for the coverage. A TV series called, "Tying the Knot: The Wedding of Melissa Joan Hart & Mark Wilkerson" starts July 27. Nightly shows will follow the planning process and culminate with the actual wedding, which will air August 2.

• Mexico will benefit with SARS limiting travel to Asia. Currently, the U.S. fashion industry imports about $23 billion a year in clothes from Asia. That is about to change, as fashion designers need to see how fabrics look on models, as well as hold face-to-face negotiations with their suppliers. And they can't do it through the Internet, phone or mail.

  The winner in this will be our neighbor to the south, as U.S. import quotas and trade tariffs make it increasingly attractive to manufacture in Mexico, which is a U.S. free-trade partner.

• Small business optimism, measured by the National Federation of Independent Business, had its biggest single-month increase in history this April. (The most recent monthly index measured.) Owners are ready to restart their efforts at growth, reports NFIB chief economist Bill Dunkelberg.