Press Release: Pegasus Solutions, Inc.
June 20, 2002
DALLAS, TX -- Pegasus Solutions, Inc. (Nasdaq: PEGS) announced yesterday at the ResExpo 2002 conference in Dallas
that it has signed a merchant payment processing agreement with Dallas-based Travelweb LLC, formerly known as Hotel
Distribution System LLC (HDS). Travelweb, a new online marketplace where hotel operators can sell rooms at net
rates and consumers can comparison shop, is a new venture recently launched by Hilton Hotels Corporation, Hyatt
Corporation, Marriott International, Six Continents Hotels, Starwood Hotels and Pegasus. Pegasus Solutions is a
leading provider of technology services to the hotel industry.
Travelweb is the newest provider of online hotel room deals operating under the merchant model business strategy.
As net rate merchants, hotel wholesalers such as Travelweb obtain net room rates from participating hotels. The
wholesaler then marks up the net rate for sale to consumers, either directly through their own site, or through
a distribution partner. The online merchant collects the room payment directly from consumers, keeps the mark-up,
and then is obligated to pay the hotel that supplied the net rate room. Additionally, the merchant may need to
compensate its online distribution partner for securing the reservation.
By leveraging the technology and infrastructure of its Pegasus Commission Processing service, Pegasus has developed
the industry's first automated net rate payment processing system to enable Travelweb to keep track of and pay
on a regular basis each hotel whose net rate rooms were sold through Travelweb.
Travelweb's first online distribution partner is Orbitz. Later this month, Pegasus Financial Services will process
all payments for Travelweb's rooms booked through Orbitz. Travelweb is the exclusive provider of merchant model
hotel rooms to Orbitz.
"The proliferation of the merchant business model has created another huge efficiency problem for the travel
industry. Online room wholesalers now must keep track of and pay each hotel for the rooms it sells on their behalf,
creating a back-office headache. And the hotels have to worry about making sure they collect the revenues due them
for each room sold via the net rate merchant," said Jeff Bzdawka, senior vice president of Pegasus Financial
Services. "We have developed a solution for this new industry problem: the industry's first automated net-rate
payment processing service. Without our new service, Travelweb would have to fall back on other less efficient
methods of processing payments, such as direct invoicing from the hotel or the use of ghost credit cards, both
of which create enormous administrative and reconciliation burdens for everyone involved.
"Regular electronic payments in the hotels' currency of choice, combined with detailed transaction reporting,
simplify the process and should greatly enhance the relationship between Travelweb and its new hotel participants,"
Bzdawka said.
"Pegasus Financial Services' unique solution will allow Travelweb to more efficiently pay our participating
hotel and distribution partners," said Travelweb Chief Executive Officer Joe Humphry. "This will greatly
alleviate accounts payable issues."
According to Forrester Research projections, the number of Americans making online travel purchases in 2002 will
grow to 23.3 million U.S. households. Forrester also predicts that online leisure travel sales will total $20.4
billion in 2002, and hotel reservations booked online will reach $3.8 billion.
According to ComScore Networks, sales at U.S. travel sites reached $7 billion in the first quarter of 2002, an
impressive increase of 87 percent versus the same period in 2001, and accounted for 41 percent of total consumer
e-commerce sales.
COMPANY INFORMATION
Dallas-based Pegasus Solutions, Inc. (http://www.pegs.com) is a leading global
provider of hotel reservation technologies. Its services include central reservations systems; electronic distribution
services that connect more than 44,000 hotels to the Internet and to the global distribution systems (GDS); travel
agent commission processing and payment services; the Utell marketing and reservation representation service (http://www.Utell.com); and PegasusCentral(TM), a Web-based enterprise solution
with property management applications. Pegasus' customers comprise tens of thousands of travel agencies around
the world, including the top 10 largest U.S.-based travel agencies(1); more than 48,000 hotel properties around
the globe, including all 50 of the largest hotel brands in the world based on total number of guest rooms(2); and
thousands of Web sites/services have their hotel reservations Powered by Pegasus(TM). In addition to its corporate
headquarters in Dallas, Pegasus has 22 offices in 16 countries, including regional hubs in Phoenix, London and
Singapore. The company's stock is traded on the Nasdaq National Market under the symbol PEGS.
About Travelweb LLC
An investment by Hilton Hotels Corporation, Hyatt Corporation, Marriott International, Six Continents Hotels, Starwood
Hotels and travel technology provider Pegasus Solutions has led to the launch of Travelweb as a new online marketplace
where hotel operators can sell rooms and consumers can comparison shop. These six companies have taken the lead
in developing an innovative solution that will improve the distribution model to increase hotel room sales via
the Internet.
This statement contains references to future events and projected results, including anticipated transactions involving
the Company and its service offerings. There can be no assurance that the referenced future events or projected
results will actually occur or that the future financial performance of the Company will be as projected. Actual
occurrences, results and performance may differ substantially and materially from those projected as a result of
a number of risks and uncertainties, such as adverse changes in general market conditions for business and leisure
travel as a result of additional terrorist activities, action by U.S. military forces, changes in hotel room rates,
capacity adjustments by airlines, trends in the overall demand for travel, and the inherent difficulty in making
projections during this period of uncertainty, as well as other risks and uncertainties mentioned in this statement
or detailed in the Company's periodic reports and registration statements filed with the Securities and Exchange
Commission including its Form 10-K for the year ended December 31, 2001.
(1) Travel Weekly, June 25, 2001, "Top 50 Travel Agencies" (2) Hotel Business, February 7, 2002, "The Top Hotel Brands" - - ranked by total number of rooms (2001)
SOURCE: Pegasus Solutions, Inc.