WASHINTON, D.C.— MeriStar Hotels & Resorts has launched a new subsidiary, The NetEffect Alliance, offering information technology (IT) services that can be tailored to other hotel management companies in the hopes of increasing MeriStar’s purchasing volume and generating additional savings. As hotel companies continue to partner up throughout the industry to save on everything from procurement costs to online transaction fees, MeriStar is gambling bulk prices on technology will also prove successful. “Procurement alliances have been around for years, this is not a new concept. We just looked for where we could specifically apply it,” said Brian Garavuso, MeriStar’s CTO, who will also lead NetEffect. “As we talked to other companies that we don’t manage for, we discovered that they don’t have the same level purchasing power and technology as we do.” MeriStar, which operates 275 North American hotels, saw an opportunity to grow its purchasing volume by aligning with other management companies, stated Garavuso. “Our core technology is easy is for us to share and other hotels can take advantage of what we’ve done at a fraction of the cost, while we recoup our investment in these technologies,” he said. The NetEffect Alliance will provide independent hotels and hotel management companies with a range of services, including: technology consulting, project management, hardware acquisition, e-marketing and other Internet-based services. The new IT venture will also offer increased purchasing volume for most major-carrier telecommunications services, generating lower costs than most individual hotels or smaller management companies could garner on their own. “The telecommunications side is where we’ve seen the most interest,” he said, noting that the company has already inked deals with “a couple mid-sized management companies,” which it plans to announce at a later date. “Long-distance service is were the volume savings are the clearest. But there’s also hardware purchasing. We buy from a lot of major brands…and it lets independent hotels piggyback on our volume so we both get better prices,” remarked Garavuso. When asked if he feared the technology alliance would hurt MeriStar’s competitive edge, he stated, “nothing is putting us at a competitive disadvantage.” “As we develop technology within our company, we deploy it and test and it, and we know it’s successful. We already have it in the market, using it, so we’ll always be a step ahead,” he added. While The NetEffect is legally a separate entity from MeriStar, it is still considered a wholly owned subsidiary and is staffed by MeriStar’s own IT team. “Part of our IT team’s ‘02 initiatives is to grow the alliance,” he stated. “We considerate it a way to fund our IT operations. We can develop more technology and by sharing it with others, it fuels itself.”
