August 19, 2003
Written by Bob Meyer, Editor of BarterNews
Golf Industry Embraces Barter
A Woodland Hills company, Golf Barter Merchandise, is marketing a service which lets golf resorts and clubs acquire golf merchandise in exchange for tee times. The California firm then sells the tee times to wholesalers.
Tee Times Perishable Commodity
Each golf course has about 60 tee-time slots in a day, and 240 people can potentially play if all the slots are filled. That's about $6,000 to $30,000 in inventory that the course can hold. Any unsold tee-time is lost if the slots are not filled up.
By dealing with Golf Barter Merchandise, golf clubs receive merchandise—complete with their own logo and colors—on a trade basis, paying for the hats, towels, etcetera with tee times. The merchandise is then sold to visitors and members, generating a nice profit!
A course in Palm Desert recently acquired 4,032 hats at $8.50 each in exchange for $35,000 worth of tee time certificates. They consequently resold the hats (through their golf shop) to visitors for $18.00, and to members of the golf club at a slightly lower price.
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(From time to time, the Tuesday Report reprints an interesting article form the archives of BarterNews. This story was taken from the Andy Granatelli cover, issue #36.)
Meeting Planners Use Barter As Tool To Save Money
Most barter companies don't limit the selection of properties to those held in their inventory (that is, rooms for which the barter company has already traded a service or product). They will also approach a hotel or resort specified by the client, or located in a destination requested by that client. "When we have a good piece of business, usually a hotel will work with us," said Bloom.
Certainly, not all barter is arranged through barter companies. For example, Central Florida Investments, which owns six hotels totaling 3,300 rooms in the Orlando area, trades directly with corporations for such items as food, golf carts and movie tickets, which the company distributes as incentives to its 4,500 employees.
Central Florida also works with 10 barter companies, but corporations that trade directly with the real estate firm can save on the 5% 15% commission barter companies charge their clients (usually payable in cash).
After a contract is signed, when going through a barter company, the meeting planner deals directly with the hotel. "We only do the financial transaction, not the meeting transaction," said Active Travel president Steven Heydt.
Most often, companies negotiate partial trades on rooms paying the difference in cash. But the sky's the limit when it comes to what can be traded. "If my client is staying at a golf resort in the off-season, I'll try to get (the resort) to throw in golf fees," said Heydt.
Handing over the reins to the barter company during negotiations takes some adjustment, noted Raby at Hi-Tec. "I'm basically left out of the loop during negotiations," she said.
Raby said her biggest frustration in barter arrangements, "was dealing with properties that didn't understand the barter process."
She said she first contacted Active Travel for Hi-Tec's upcoming meeting almost a year ago, but a contract with a hotel was not signed until several months ago.
Why? "About four properties were on the verge of doing a deal based on the assumption they would get shoes from us," rather than the products or services available from the barter company, she explained, noting that Hi-Tec trades shoes through the barter company in overseas markets only.
One common trap for meeting planners is undervaluing their trade credits. "Meeting planners need to ask themselves, 'What rate is my credit being valued at?' A good rate is the negotiated rate rather than the rack rate," said Arnold Hoffman, manager at 3M Media Tradewinds, which arranges trades for 3M Media in Bedford Park (IL).
Planners should consider being flexible regarding the destination, property and timing of their meetings. "The more property names I have, the better my chance at closing a deal," said Jill Halper, vice president of national accounts at Illinois Trade Association, a retail trade exchange company in Niles.
Higher occupancy rates for hotels have put the pinch on room availability, so scheduling a meeting in the shoulder season is more likely to yield a better deal. "We find more blackout times than before, and we never barter in the high season now," noted Jack Schacht, president of Illinois Trade Association.
The hottest destinations for bartered meetings are Florida, Mexico and the Caribbean. Some corporate trade companies also barter for berths on cruises, and Europe is a growing market. Heydt said his company recently did a trade with ITT Sheraton for advertising of Ciga Hotels, the European hotel chain recently acquired by Sheraton.
"Now our European office is using those hotels to fulfill our needs," Heydt said. "If the U.S. market is tight, we do it in the U.K."
Certain popular destinations—New York, Phoenix, Las Vegas-are pretty much off-limits for bartered rooms. However, on occasion even in those cities a booked hotel might accept a barter bid...if there's been a last-minute cancellation, for example. Wald at Icon International booked a client 65 rooms in a top-notch resort in Las Vegas for a meeting in September with only two weeks' notice.
The rule that there must be no prior contact between hotel and client for a barter deal to work is absolute.
However, Murray at Koh-I-Noor said he has been visiting properties incognito in the Princeton area, where he plans to hold the company's 1996 sales meeting, so he can compile a list of suggestions for Active Travel and avoid a problem he and other meeting planners encountered this year at the hotel: poor treatment from hotel management.
They treated us like second-class citizens because we weren't paying full price," he said, noting that Koh-I-Noor brought the property $100,000 worth of business.
Murray said the hotel also erroneously billed him for the full cash value of the rooms. "Active had picked up the cash portion of the bill and we didn't know it," he said. To avoid such hassles, Murray advised meeting planners to make sure the billing process is outlined up front and request that the barter company's travel arranger be present at checkout.
Despite these glitches, Murray said for next year's meeting he plans to barter for "as much as we can," including air and ground transportation.
In fact the reason he is shifting the meeting, to the Princeton area from Woodcliff Lake, is to be closer to Philadelphia International and secondary airports that don't have the traffic volume of more popular destinations like Newark—and therefore might present more opportunities for a trade on airfare.
Every barter company in the world is listed on our web site, click through to our Global List of Barter Companies.
BAY Area Bulletin Board Buoy's Barter
An increasing number of entrepreneurs are making barter a part of their business model. The direction they take is expanding from trade exchanges into informal networks, like online community bulletin boards. In the Bay Area, craiglist.org offers such a barter section.
Elsewhere in the Bay Area, Chris Billawala, GM of San Jose's Park Plaza Hotel, says the hotel is doing 35% more business in trade, compared to two years ago when the economic downturn started, because they have more empty rooms.
The hotel acquired $20,000 in print advertising and printing, and most recently ordered $6,000 worth of mouse pads with the hotel's picture and logo. Billawala says they would not have purchased the mouse pads on cash, even though he feels it's a valuable long-term promotion buy.
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"What we have here is a failure to communicate!"
Years ago, one of the most visible people in the barter industry said the #1 reason why the industry wasn't farther along in its development was due to a "failure to communicate" by those in the business.
This realization was the genesis of The Competitive Edge newsletter, now into its 18th year of publication. Trade exchange owners who use this powerful marketing and promotional tool are never guilty of "failing to communicate."
As the owner of a trade exchange you must stay in front of your clients. Informing, educating, and inspiring them, because your clients' bartering is a relatively small percentage of their overall business. So if you don't keep their interest and enthusiasm for trade at a high level, you lose.
Your primary aim, like all other businesses, is to get your clients coming back for more. Every extraordinary business (and every trade exchange owner who wants to be extraordinary) knows that the customer you have, is a lot less expensive to sell than the customer you don't yet have!
Want to take your exchange to a higher level? Use The Competitive Edge newsletter in your operation—it "sells" the many benefits of working through your trade exchange like nothing else!
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