Outsourcing Hotel Corporate Trade Sales
The model’s value proposition is clarified by the way we qualify and enroll a new client and generate business on its behalf. A company must be in Hospitality, Construction, Manufacturing, Services or Retail. Must be well-established and profitable with a desire to increase sales and profits. A hotel must provide these metrics:
The amount of sales to corporate entities dictates the amount of trade business a business can conduct as such spectacular margins. The same service is now available to U.S. hotels.
*When an OTA re-sells a $200 room for $100 and pays the hotel $40, the sale is made at an 80% discount. We are the Antidote to Discounts.
1. The amount of current sales to corporate entities, exclusive of sales to consumers/tourists, not-for-profits and
public entities. For the purpose of this study we set that number at $10M, annually. Typically, the amount of additional
business we generate is 10%, or less, of cash sales, in this case, $1M.
3. The actual cost of OUTSOURCING the sale of product that would go unsold. For hotels, it tops out at 18%-20% of
rack rate*. Anything the hotel receives above that number is profit because in-house administrative, advertising, sales
and other costs cannot be charged against outsourced sales.
Our sales force in Switzerland acts as Outsourced Service Providers (OSP), re-sellers of hotel and other products and services on behalf of a network of businesses. The model has been duplicated for the U.S.
2. The estimated amount of unused and unsold capacity/inventory, to insure that adding 1M in trade sales will have
little, or no, effect on the $10M in regular cash business conducted.
(A partial solution to deeply discounted OTAs’ sales)
Over the next fiscal period, we will purchase $1M in product at a cost, to the hotel, of $200K. Our sales force produces the clients, and the deals, and we receive 10% for sales commission and 5% in fees for a total of 35% or $350K. Each deal we present will have a minimum of 50% in cash, totaling $500,000, over the contract’s period. The remaining 50% is paid using a private, digital currency issued and managed by the System which is channeled through procurement and quickly converted to cash. Sales are made at rack rates, for cash, resulting in a net profit of 65%, or $650,000, on $1M in sales.