How a Barter Strategy Can Solve Excess Capacity and Grow Your Hospitality Business 


Aside from the incredible toll it has taken on families, frontline workers and vulnerable populations, it’s no secret that COVID-19 completely upended the hospitality industry in 2020.

The economic toll – restaurants empty or shuttered, hotel workers furloughed, bottom lines and markets reaching new lows – along with the physical and emotional impact, will be felt for years, if not decades. This has caused some business leaders to re-evaluate how they look at their business, as well as each other. Rather than competing with each other, we are now seeing business owners coming together in formal and informal ways, developing networks and supporting each other in identifying creative solutions to weather the pandemic.

When the pandemic accelerated in early 2020, a few peers and I began wondering what we could do for our home, Seattle. This conversation evolved into a Facebook group for small business owners – heavily weighted towards businesses in the hospitality industry – that grew to have thousands of members who gathered to discuss and share resources and inspiration each day.

Prior to the COVID-19 pandemic, approximately one-third of the global economy was non-cash. Now, bartering has gone digital.

It’s been inspiring to watch business owners join together to share ideas, solve problems and even forge new business relationships.

You may be wondering how this anecdote relates to your hotel, pizzeria or café. The mindset evident in that Facebook group carries over to a concept that has been around for centuries: barter. Prior to the COVID-19 pandemic, approximately one-third of the global economy was non-cash. Now, bartering, the trade system of choice in the Middle Ages, has returned with a modern & digital twist.

Early on, social networks regularly featured posts from friends and neighbors looking to swap staples such as eggs, toilet paper and hand sanitizer. But did you know organizations like Porsche, iHeartRadio and the San Francisco 49ers also barter using modern-day, digital bartering networks? These networks allow organizations to free up their cashflow – particularly during times of economic uncertainty – by trading what they have to get what they need. In the COVID-19 landscape, excess capacity is a reality for countless businesses in the hospitality industry, whether that means hotel rooms or food.

In most barter transactions, there is a double coincidence of wants. Both parties have to have exactly what the other party needs or wants, proving to be ineffective in the long run. Using a digital bartner network, one party can sell excess products for a unique digital currency that can be used to purchase other budgeted products or services from other members. For example, restaurants can drive new customers through their doors, fill empty tables and use this credit to complete necessary renovations; hotel owners can find creative ways to fill empty room & use it to pay for advertising. 

Take the Heavy Restaurant Group, a collection of diverse Seattle-area restaurants and events that had to think up new ways to stay competitive amid the pandemic. With indoor dining limited, cash flow was of particular concern, and management looked at ways to trade as opposed to spending cash on items like wine, meats, printing and website work. They leaned into a digital barter network to leverage their community.

But barter wasn’t a tool they started using just because of COVID-19; the restaurant group said that they’ve gotten thousands of new restaurant visitors in the years since it began.

Trading with a digital community can also help with much-needed repairs and renovation in addition to getting customers in the door. Tim Short, the owner of Redmond’s Bar & Grill, said they’ve been able to use barter for flooring and painting, and has even been able to hire contractors to do the work. Short estimates that the restaurant has increased cashflow by more than $350,000 using barter and says that by saving cash spent on repairs, monthly cleanings, and various recurring expenses, the establishment has been able to save cash for other expenses. This led to the business being able to keep some of its staff employed during the pandemic and maintain the restaurant.

Using a barter network can also help you reward your team, and extra capacity in a hotel or restaurant – even if it’s gift cards or credit – can end up back with your workers. For example, the owner of Oakland’s Carrie Dove Catering uses credits in his digital barter network for employee bonuses, which can be used on vacations, meals in restaurants or a variety of other services available.

With cash tight and capacity abundant, I urge you to think outside-the-box with both your team and fellow business owners so you can come together and leverage your collective capacity. In the most difficult of times, these actions have helped save businesses that went on to do extraordinary things. I’m confident that by embracing barter, you can do the same.

About the Author: 

Bob Bagga is CEO of BizX, a digital barter exchange.

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