Tuesday Report - July 17, 2001

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

July 17, 2001

Travelbyus.com Founder Buys ITEX Franchise

Peter Adam of British Columbia province reportedly has paid the ITEX Corporation, a retail trade exchange, $400,000 for a franchise in Vancouver. Adams, with roots in New Zealand, was a founder and vice president of travelbyus.com doing business in Canada.

The franchise agreement provides that ITEX will assign 1000 of the former Ubarter.com Vancouver clients to Adams. Collins Christensen, CEO of ITEX, says the sale of the franchise was made possible by the recent purchase of Ubarter.com of Canada. (Several months ago ITEX acquired all of Ubarter.com of Canada for less than the recent franchise sale.)

Hotels Suffer Operating Profit Decline This Year

The Atlanta-based Hospitality Research Group reports that travelers are taking a bite out of hotels' profit margins by choosing cheaper digs, ordering less food, and using cell-phones. They predict the average U.S. hotel will suffer a 5.6% decline in operating profits this year. (The anticipated drop this year compares with a 10.1% increase in 2000.)

Hotels are seeing a big dent in telephone usage, which accounts for 2% to 2.5% of their revenue, as travelers find it less expensive to use their cell-phones than to pay hefty hotel phone charges. Guests are also spending less on room service and in-hotel restaurants.

Price pressures are expected to continue into next year because they must begin negotiating prices with big customers in the latter half of this year. Hardest hit are the resorts and high-end hotels.

Airlines Recoil From Major Threat Of Business Traveler "Buydown"

As a result of declining demand from high-fare business travelers, the nine major airlines will post a combined second-quarter loss, the first since 1992. The group is expected to lose money for the full year as well—in what would be the first annual loss since 1994.

In short, airline revenue has fallen sharply this year as companies took exception to the airlines raising business fares six times last year—sending average business fares almost five times above leisure fares.

Companies have cut travel budgets by keeping employees at home or forcing them to buy lower-price, advance-purchase, non-refundable tickets, which can slash costs as much as 75% for some routes! These business passengers flying like leisure travelers--traveler "buydown"—is the biggest threat to the airline industry.

Here And There. . .

The value of billboards continues to grow, as evidenced by the marketplace. Clear Channel Communications recently did a $850 million 10-year contract with Carrefour's European stores.

Clear Channel will build 35,000 advertising panels to be rolled out in 2,700 Carrefour parking areas across eleven European countries at the start of next year. Clear Channel also won a 15-year $500 million outdoor advertising account for Singapore.
Executives are spending at last two hours a day using e-mail, according to an international study by Rogen International...about 4 trillion e-mails are sent worldwide each year, that's an increase of more than 500% in six years.
Public garages have become the latest spaces for advertisers to display their marketing messages. Advertisers like the free standing signs near cashier booths and garage entrances because their message won't be as cluttered as a busy roadside placement, where there are other billboards. Ads sell for $2 to $3 cost-per-thousand viewers, which is a bargain compared to other forms of advertising.
The Internet meltdown continues, according to Webmergers.com, a San Francisco provider of information about buying and selling internet companies. They report another 53 internet companies closed in June, bringing the total to 555 of dot-com sector companies to shut down over the last 18 months.

According to Webmergers CEO Tim Miller, "We are seeing the plague migrate increasingly away from business-to-consumer e-commerce toward properties that provide access, infrastructure, or consulting services to a business or general audience."
In the early days of TV, ad agencies often produced and sold shows to the networks. Those days may be returning as the networks are looking to eliminate risk, and looking for ways to work with the "players" more as partners.

Omnicom is negotiating such a deal with NBC that would give the ad firm an unusual behind-the-scenes role in a fall TV music special starring Jennifer Lopez. In short, NBC would give up the right to sell most of the commercial time on the special, and would get limited profit on the show.

In exchange Omnicom will cover most of the cost of producing the pre-Thanksgiving special, shouldering the burden of lining up advertisers from its portfolio of clients.
Madison Avenue's advertising community is being rocked by global marketers who are consolidating all of their advertising business at one shop.

Latest to join in the move is Exxon that has opted to film all their television spots in one location, while having the message and ad told through a voice-over in one of 25 languages. (The average TV spot costs $343,000 to produce, according to the American Association of Advertising Agencies.)
Ed Mann, co-founder of Premiere Radio Networks and now president of MannGroup, an independent radio syndicator, is unleashing two products to the marketplace—Musical Starstreams and Hart Moments with Tanya Hart.

The Los Angeles-based MannGroup focuses on production and distribution of custom jingles and imaging for major market stations in most all formats on a barter basis.

We welcome your comments, questions, and observations.

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