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

June 17, 2003

Written by Bob Meyer, Editor of BarterNews

ITEX's Humer And Kerr Terminated, Company's Focus Reoriented As White And Zimmelman Take Over Management

Franchising Effort Will Continue To Be Priority

Lewis "Spike" Humer, CEO since November 2001, and Melvin Kerr, COO since December 2001, have been terminated for "cause" by the ITEX Board ofDirectors. Humer was also removed as a Director by the Board.

Chairman of the Board Steven White and Alan Zimmelman, Director, will step in and each play a major, vigorous role in the day-to-day management of the company.

ITEX announced that it will be divesting some or all corporate-owned offices (three in the U.S. and two in Canada), to focus on building its broker network. The expected return will be $1 million in reduced overhead a year.

"We believe the new initiatives will allow the company to grow at a faster pace while reducing overall costs of managing the business model," reported Steven White. "By divesting corporate-owned offices, our focus will not compete with our number one asset: the ITEX Broker Network. Creating bottom-line cash profits from our existing revenue stream is our first priority. Our second priority is increasing revenues by practicing superior customer service with our existing and future customers."

For information on The Barter Market Place click here.

Part III
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.

Key Elements Of The Contract

When negotiating a formal contract, be certain that the following key elements are included, either in the body of the contract or as attachments to it.

List the media covered. The barter agreement should be flexible enough to go beyond one media schedule. Generally all types of media are barter eligible except network television and newspapers. Bartered media include print (consumer, business, trade), direct mail, spot media (TV, cable, radio), national media (cable and syndicated TV, network radio), outdoor advertising, and international media.

Spell out the media services required from the barter company. Always be sure that the contract specifies how the barter company will prove that your ad ran when and where you wanted. This includes "proof of performance" billing, in which you receive affidavits from the broadcast stations through the barter company as evidence. You can require that the affidavits be notarized, if you wish. In print media, checking copies or tear sheets serves the same purpose.

You also should include language about how the barter company will conduct "post-analysis/reconciliation," as you need to know the actual ratings versus the estimated ratings of your ads. These figures are based on audience measurement services subscribed to by the barter company.

Include safeguards. The contract should state clearly that all media must be bought to advertising agency specifications, and indicate that the barter company will receive the specs from the agency well ahead of time. This section would also indicate that bartered media placement must be guaranteed no differently than media bought for cash.

Describe how you want broadcast media to be monitored. Don't be hesitant about covering these details in the written agreement or contract. The barter company must use broadcast and insertion orders, and it must monitor commercials on a regular basis. Do not accept schedule changes unless you have approved the changes in writing.

The barter company also must agree that any preemptions are "made good" during the same period of time for which the media was scheduled, with spots of equal or greater value. These are standard monitoring steps any barter company has to perform, and detailing them in a contract is expected.

Show how you will control the room credits. The best way to prevent bartered room credits from leaving the control of the hotel is to write conditions under which the barter company may use or trade/sell the credits.

Once the advertising is placed, the barter company, not you, owns the room credits. Barter room credits should not be advertised or offered to the general public without your written approval. If no walk-ins are allowed you will maintain better control. The same goes for groups and meetings. It is a good idea to spell out the number of rooms that you define as a group, maybe over 15 reservations.

Build in flexibility to increase market share. If a particular property in a chain has an existing negotiated volume discount with a customer, that naturally takes precedence over the barter agreement. However, that customer could use barter rooms at other hotels in the chain.

State the value you are putting on your rooms in the contract. Since you have already spelled out that all media are to be bought according to advertising agency specifications at negotiated rates and not standard rate, card rate, or other arbitrary cost, then the barter company expects the room credits to be valid at the lowest available rates you offer cash-paying guests. This includes corporate rates but not package rates.

If the negotiated media rate equals the lowest available room rates, then the ratio of the barter agreement is $1 advertising for $1 room credit. Since the barter company expects the room credits to have the same value in its marketplace as the media does to you, blackouts or other restrictions lower the value of the room credits considerably. And the shorter the expiration date, the lower the value.

Exclusivity benefits both parties. Exclusivity is ranked at the top of the barter company's wish list, since it uses the room credits to create new barter agreements. If you trade rooms with more than one barter company, the worth of the room credits to all of them is greatly diminished, and you won't be getting the media value you expect.

Also, the more media one barter company places with the same station or magazine for all of its barter clients, the more "clout" you have to get the best negotiated rates from that media source. So work with one barter company for best results.

Since you have negotiated tight control on use of the room credits and are receiving negotiated media rates, you are getting full value for your rooms. The bartered rooms are all net, non-commissionable, and no credit card fees are involved. It is up to the barter company and its customers to use the credits at the room rates you established up front.

Extraordinary Revealing Report - Click here.

"Rainmaker" Involved In Barter "Royalty-In-Kind" Program

Kemp Meets With Energy Department To Bring Venezuelan Oil To U.S.

A little-known New York trading company, Free Market Petroleum (of which Jack Kemp is a board member), is looking to work with the Venezuelan government oil monopoly (PdVSA) and the U.S. Department of Energy as a middle man and facilitator to bring some 54 million barrels of crude to the U.S. Strategic Petroleum Reserve.

The Department of Energy reports that the Strategic Reserve doesn't directly purchase crude oil to deposit in the reserve, located in old salt mines in Louisiana andTexas. Rather the department receives oil in lieu of royalty payments (royalties are owed to the government on offshore oil leases in federally controlled waters) owed to the U.S. government by oil companies, i.e. oil is bartered to the government for royalty payments.

To consummate the deal, it now looks like Free Market Petroleum will need to sell some of its Venezuelan oil to other U.S. oil companies, and then those companies would deposit the same oil into the Reserve to pay off the royalties owed to the U.S. government.

If you haven't read the current issue of BarterNews, get yourself a copy now! Orders are shipped the same day we receive them. (Click on Order Form.)

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.

If you haven't read the current issue of BarterNews, get yourself a copy now! Orders are shipped the same day we receive them. (Click on Order Form.)

Get New Money-Making Ideas, and Valuable Contacts!

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

• Bartercard, now located in 14 countries around the globe, has long promoted sales activity between countries to stimulate additional levels of trading. To further facilitate the demand in such trading efforts the company has established an international trading team based in their Southport, Australia, headquarters, with divisions in each of the countries Bartercard has offices.
  
  
• 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 securities analyst, Benjamin Chui of Investrend Research, has published a report on International Monetary Systems (OTCBB:INLM). According to Chui, the barter industry is ripe for consolidation and IMS is well positioned to be one of the leading players.

  The report contends that in the next ten years there will be no more than five major barter exchanges and they will dominate all bartering in the U.S., with IMS being one of the eventual top five players.
  

• A business-spending recovery is underway, but don't expect to see a big improvement until next year. Economists expect to see a 2.9% rise in real capital spending in 2003, followed by an 11% jump in 2004. Non-defense durable goods orders have increased 4.4% since December. That's compared to new orders that were down 5% in 2002 and 14.2% in 2001. So the revival looks encouraging.
  

• A government-wide purchasing program for computer products, in part to keep government agencies from overpaying for software, is expected to save more than $100 million each year. The new program will end the practice of agencies negotiating separate licenses to buy software.
  

• Mortgage debt in the U.S. is up 25% in the last two years, according to the Federal Reserve. Cash-driven borrowing drives owner home equity to record-low percentages. These real-estate-backed borrowings have been a major source of support for the economy, as consumers used those funds to renovate or buy goods and services.
  

• Medical debt has emerged as a leading cause of personal bankruptcy.