| As a potential customer, you get to take advantage of the products that are being developed for one of the largest REITs and largest hotel management companies in the industry.” |
One company that continues to believe in the power of technology is MeriStar Hotels & Resorts, sister company of lodging REIT MeriStar Hospitality Corporation. While many other real estate companies have shied away, MeriStar has aggressively pursued technology investments and recently launched a new subsidiary, The NetEffect Alliance, which will specialize in information technology consulting and telecommunications services for the hotel industry. Some skeptics may ask why the company decided to cast this line now, when it’s clearly not the finest hour for technology, but MeriStar had no qualms about it.
“We’ve developed quite a bit of technology over the last couple of years that benefited real estate investment trusts and their properties,” says Brian Garavuso, MeriStar’s chief technology officer, who will also head The NetEffect. “We looked at the opportunity as a way to share that technology with other companies. As a potential customer, you get to take advantage of the products that are being developed for one of the largest REITs and largest hotel management companies in the industry.”
Garavuso says The NetEffect has already landed a few clients and is actively negotiating with additional companies, primarily in North America and the United Kingdom. The NetEffect will offer services ranging from web design for an individual hotel or resort, to designing, installing and maintaining a property management system.
“The way we’ve structured some of our programs, particularly our telecommunications program, the more people that participate in it, the lower the costs will go,” Garavuso says. “You get pricing and benefits based on the size of a very large company, and as we add other companies’ volume to the mix, then the vendors we deal with will drop the cost down and everyone in the Alliance can take advantage of that.”
At press time, MeriStar Hotels & Resorts signed an agreement to merge with Interstate Hotels Corporation. The deal is expected to close in the third quarter of 2002, and the combined company will be known as Interstate Hotels Corporation.
