Trade Wins

I purchased a nine-room boutique Inn in 2002 and for the past six years I have sold empty rooms during my off-season for trade dollars. As a result, I have generated $50,000 in value that I use to trade for basic hotel supplies and guest amenities.

All of us who own small, independent lodging properties recognize the importance of cash flow during slower seasons, yet the value of an empty room can be measured by more than currency. For my Inn, I have received a PAR of bed linens in exchange for two room nights in November, cleaning supplies for my slate tile floors in exchange for one room night in March, and a year’s supply of printed business cards, stationery, and postcards in exchange for two room nights in April.

Business owners from across America are using barter exchanges to realize value from empty rooms (in the case of hotel owners), help manage inventory of their product lines, or deliver professional services. This concept of trade accounts allows you to barter available rooms at full value toward services you are currently paying cash for, such as legal services, accounting, printing, and even national advertising.

Here is an example of how this trade system works. When I signed up, my Inn was posted on a national network of members. A Texas member stayed with me three nights and the value (rack rate of $500) of their reservation was added to my trade account (they pay my taxes in cash).

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I then informed my account representative that I was interested in printing services and she connected me with a Michigan printer who was a member of our trade network. The printer produced $500 of services and sent stationery and business cards to me, and my account representative deducted $500 from my trade account (and added $500 to the printer’s account). Basically, I traded the room nights for my Texas guest for printing services from my Michigan printer.

The beauty of this trade program is that the account representatives do all the legwork—they advertise your hotel to all the members in the network, manage the reservations, find the services that you request, and do all the accounting of trade dollars.

Advertising is one of the best uses of your barter dollar, and the Inn has placed full-page ads in regional publications that have returned four-times the trade dollar investment with cash reservations.

You can also use your barter dollars to buy restaurant or shopping vouchers. Other ideas include setting up a rewards program for frequent cash-paying guests and buying their awards, such as free airport pickup or gift baskets, on barter.

There are many reasons to work with barter as a part of your overall marketing strategy. It ensures your excess capacity is sold “off-market” and brings in new customers. Rooms are not sold at a discount, thereby ensuring pricing integrity, and you decide when to sell unused space. Bartering  can provide additional revenue to other departments like food and beverage, telephone, and laundry.

Here’s the catch. There is a monthly cash fee (about $20) and 5-6 percent of each transaction is a cash fee regardless of whether you are buying or selling. This program, like any other, makes sense if you are actively using it. Your otherwise empty room nights will start filling up as your hotel gets seen by members, then your trade account will start to grow. That’s when the value is realized.

John Eastman owns the Inn on the Creek in Jackson Hole, Wyo., and is an AH&LA board member. He can be reached at john@teton.com.

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