Online Hotel Distribution Travelweb Signs New Agreement with Pegasus

Pegasus Solutions, Inc. (Nasdaq: PEGS) announced today 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).
, 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.
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