Pegasus Finalizes HDS Technology Agreement

Pegasus Solutions, Inc. (Nasdaq: PEGS) has announced that it has finalized its contract with Hotel
Distribution System, LLC (HDS), a newly formed venture of Hilton
Hotels Corporation; Hyatt Hotels; Marriott Hotels, Resorts and Suites;
Six Continents Hotels; Starwood Hotels and Pegasus. 
In addition,
Pegasus has transferred its consumer site,
to HDS as
part of Pegasus` capital contribution to the venture. Pegasus
Solutions is a leading provider of technology services to the hotel

HDS was formed in February 2002
to distribute discount “net-rate”
hotel rooms over the Internet. Utilizing the technology leadership of
Pegasus, HDS plans to provide Internet sites with the ability to sell
hotel rooms at net rates via direct connections to hotel central
reservations systems., launched by Pegasus Solutions in 1994, was the first
site to offer real-time online hotel reservations. The site evolved to
offer reservations and detailed online content for more than 42,000

Under the three-year technology contract, Pegasus will develop new and
innovative technology and provide related services that will automate
the net-rate reservation and “merchant model” processes for HDS and
the participating hotels.  Pursuant to the contract, Pegasus will
receive an initial payment of $1.5 million and a $3.00 transaction fee
for each reservation processed by the new technology. 

“The current online hotel net-rate discount marketplace has been
flourishing despite using virtually all manual processes,” said
Pegasus Solutions Chief Executive Officer and Chairman of the Board
John F. Davis III
. “Companies offering net-rate inventory currently
process all of their net-rate reservations manually, using faxes or
email to communicate hotel reservations between the hotel discounter
and the hotel.


“Using the new Pegasus technology, hotels will be able to
electronically and seamlessly supply net rates via their central
reservations systems (CRS) directly through Pegasus` Electronic
Distribution System to net-rate providers, significantly reducing the
hotels` distribution costs. As a result, for the first time, hotels
will be able to conduct real-time revenue or yield management of their
discounted net rates, ensuring that they leverage the discount channel
as it`s intended to be used: to fill hotel rooms during low occupancy

“In addition, HDS will be the first hotel discounter to use our new
automated net-rate `merchant-model mark-up` technology, which provides
the credit card processing and automatic rate mark-up capability,”
Davis said.

“The end result of our new net-rate technology will provide benefits
to both online shoppers and hotels by providing better information for
consumers, greater accuracy in reservations and customer service, and
more reliable efficiency in reservation system connectivity to
Internet retailers,” Davis concluded.

Pegasus Solutions` Utell subsidiary is expected to be one of the
first hotel suppliers to distribute net rates through HDS. All of
Utell`s 5,500 hotel members will be able to use a single source to
supply net rates to HDS and any of its affiliates, such as Orbitz. 
By using Utell`s Web-based NetRez system, Utell member hotels will be
able to dynamically open and close access to their net-rate room
inventory based upon their last-minute occupancy needs.

According to Forrester Research
, the number of Americans making online
travel purchases increased nearly 17 percent in 2001, to 17.8 million
U.S. households.  Forrester also predicts that online leisure travel
sales will total $14.2 billion in 2001, despite a 20 percent drop in
overall travel industry revenues for the year.

To View Exclusive Interview with John Davis Click here.