Travel Industry and Barter

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WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS? WHO WILL YOU BILL FOR YOUR UNSOLD SPACE, EMPTY HOTEL ROOMS OR SEATS?

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www.ormita.comBarter and the Travel Industry

Transcript of Travel Industry and Barter

Page 1: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

WHO WILL YOU BILL FOR

YOUR UNSOLD SPACE, EMPTY

HOTEL ROOMS OR SEATS?

Page 2: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

• Shrinking market• Competitors discounting rooms• Price-sensitive customers shopping around• Constant upgrade costs• Competing destinations• Maintenance• Seasonality • Natural disasters

ISSUES FACING THE TRAVEL INDUSTRY

Page 3: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

YOUR CHALLENGE

• Find new customers • Maximize occupancy• Grow income• Increase profitability• Enhance brand image / value• Remain competitive

Page 4: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

UNSOLD TIME = LOST REVENUE

• Every unsold hour represents an opportunity to earn revenue that you will never recover

• Your occupancy rate is limited by the number of people who see you or hear about you

Page 5: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

DISCOUNTINGIS NOT THE ONLY ANSWER

Page 6: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

If everyone discounts then the overall perception of the market

price will go down

FACT #1

Page 7: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

Competitors with bigger pockets could ‘out-discount’ (and out-last) you

FACT #2

Page 8: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

Once you become known for discounting it is very difficult to

increase your price

FACT #3

Page 9: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

USING YOUR UNSOLD SPACE TO BUY ADVERTISING

Page 10: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

WHAT IF YOU COULD SWAP YOUR EMPTY ROOMS FOR

ADVERTISING IN …

• Billboards & Indoor • Internet Websites• Magazines • Newspapers• Public Relations • Radio

• Expos and Events • Television

Page 11: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

Page 12: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

BARTERING …

• Conserves your cash

• Allows you to maintain advertising budget regardless of cash sales

• Lets you test new markets where putting cash on the line may be a risk

Page 13: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

You want them but they do not want you

You want a lot of what they have, they only want a little of what you have

You want to buy now, they want to buy later

Unfortunately direct barter can be extremely difficult to organise by yourself

Page 14: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

ORMITA IS INDIRECT BARTER

Retail Shop

Radio Station

Hotel

Manufacturer

Hospital

Accounting Firm

Page 15: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

ORMITA CAN PROVIDE YOU WITH A GLOBAL ADVERTISING

CAMPAIGN WITHOUT YOU NEEDING TO SPEND CASH

• Canada• China• Hong Kong• India• Jordan

• Mexico• Poland• Thailand• Turkey• USA

Page 16: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

GET NEW CASH PAYING CUSTOMERS!

• By bartering your unsold hotel rooms, event tickets, entertainment or space for advertising you can position your brand to reach desirable corporate, group and leisure accounts.

• You pay for your advertising using your own unsold capacity – not cash.

Page 17: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

OTHERBENEFITS

Page 18: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

BARTER REPRESENTS A GUARANTEED SALE

• When you make a purchase using cash you have no guarantee that you will get a new customer to buy from you

• When you buy using barter credit then there is a guarantee that someone else in the network will buy from you

• When you buy using cash you may not get any cash customers back

Page 19: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

YOU KEEP THE DIFFERENCE

• The difference between the voucher and the room cost is called “breakage” – E.g. You barter a $100 gift voucher but a one night stay may be

worth $90. – No refund is given on an unused portion of a voucher

• Customers will often pay you extra cash if the voucher is slightly less than the total bill– E.g. You barter a $100 gift voucher but a one night stay may be

worth $110.

Page 20: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

PROVIDES MORE REFERRALS

• Creates more credibility than advertising alone

• Travellers often view referral information before making online bookings

• Builds consumer trust• May lead to additional cash business (and

often - repeat business)

Page 21: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

INTEREST FREE FINANCE

• Bartering offers finance without interest – (buy now – repay with barter)

• Banks offer finance with interest – (buy now – repay with cash)

Page 22: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

ORMITA : • Finds you media on barter and negotiates

on your behalf

• Lets you buy media now and repay using your hotel rooms later

• Records the value of each transaction when it takes place

Page 23: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

TYPICAL CONCERNS ABOUT BARTERING

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WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

DO I HAVE TO SELL FIRST?

No :

• You can buy media first and sell later

• Our line of credit is interest-free

Page 25: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

WILL I LOOSE CASH CUSTOMERS?

• Contractual provisions to only send guests during certain times of year (e.g. when you are less busy)

• If one of our customers has stayed with you in the past 12 months then you have the right to decline them on barter

Page 26: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

WHAT TYPE OF GUESTS WILL YOU SEND ME?

• Ormita operates a “business to business” barter exchange network so guests will typically be corporate business travellers and/or company owners & managers who are on vacation

• Contractual provisions can be put into place regarding quality of the guests

Page 27: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

WHAT HAPPENS TO THE EXTRA THINGS THESE PEOPLE WANT?

• Extra expenses on a customers bill are settled directly by the customer with cash or credit (room service, phone calls, gift shop purchases etc)

Page 28: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

IS IT DIFFICULT FOR MY STAFF TO MANAGE?

No :

• You can send end-users electronic or printed gift vouchers to present at your reception

• Typically: a minimum 7 days advance notice is given to you for guest bookings

Page 29: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

IS RECORD KEEPING EASY?

Yes:

• You receive a monthly statement which shows all purchases and expenses

• Works just like a bank account!– You set up a “barter” bank account– Expenses paid using barter dollars are debited from this account– Sales made on barter are credited to this account

Page 30: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

ARE THERE TAX ISSUES?

No more than there would be for cash:

• Income tax is paid on profit– If you spend all the barter income that you earn you

have no barter profit (and therefore no income tax)

• Sales tax / GST / VAT must be paid according to your government regulations

Page 31: Travel Industry and Barter

WHO WILL YOU BILL FOR LAST NIGHTS EMPTY HOTEL ROOMS?

THANK YOU!

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• Present in 21 countries and growing• Customers from 54 countries• More than $2.6 billion USD in barter deals

Visit our website at: www.ormita.com