Like most hotel owners, Dominik Eckenstein runs an unpredictable business. During the busy summer season, the Admiral Fell Inn's 80 rooms might be teeming with guests; on slow nights he has a heap of empties.
Rather than let those empty rooms cost him money, Eckenstein puts them to use.
He barters them.
Eckenstein will swap a stay at the inn for cleaning supplies, flowers or computer hardware. He bought some scuba equipment and lessons. He even stayed in someone else's hotel.
The method is neither innovative nor unusual. Before there was cash there was barter, and small businesses across the country have found it a good salve for the wounds of the cash market. But in Baltimore, where organized bartering was somewhat slow to catch on, the concept is showing increasing signs that it has taken hold.
Today, local small businesses and business owners are trading regularly for everything from landscaping and computer supplies maid service and dental work. One local florist said he has traded $20,000 worth of flowers. Two trade exchanges are scouring the city trying to entice businesses to trade with them instead of their competition. And the Hamilton woman who launched an exchange three years ago -- the Baltimore Trade Exchange -- just drew her first paycheck, in cash no less.
"It's not new, it's a set-up that's been used for the last thousand years -- trade your product," said Eckenstein, who estimates that three or four customers a month stay in his hotel on barter. "It's just done a different way now."
The way it's done is through one of the country's 400 organized bartering cooperatives, which oversee about $4 billion in barter a year, according to the National Association of Trade Exchanges. The Baltimore Trade Exchange and the Kensington-based Barter Systems Inc. claim about 600 area members between them.
The businesses involved don't trade goods and services with each other directly; they do it through an exchange. A building contractor who performs a $2,000 renovation job for a restaurant, for instance, doesn't have to take $2,000 worth of meals in return. He or she can spend a like amount of "barter dollars" with another member of the cooperative.
So when the owner of an office supply store went tanning at a salon in Hampden, the salon owner used the credits to have her house cleaned by a maid service.
The owner of the maid service sent his family to a dentist in Perry Hall.
The dentist, working through a New England exchange, took his daughter on a ski vacation in Vermont.
Many of the trades are arranged by phone and recorded by the exchange's operator, but the exchanges also print a form of currency that can be used like coupons at restaurants or for walk-in services. Transactions are taxed based on their cash value, and account information is reported to the Internal Revenue Service by the trade exchanges.
"Baltimore was a little late coming to the party, but it's here now," said Perry Constantinides, who founded Barter Systems in 1977 and expanded it to Baltimore 10 years later. "The competition has gotten pretty fierce."
Constantinides' competition is Mary Anne Rishebarger, a 40-year-old Hamilton woman who started the Baltimore Trade Exchange in her dining room in 1995. Until two months ago, her only income came from bartering membership in the exchange -- letting a computer retailer join for a computer, letting a restaurant join for a free lunch.
Now she draws a $2,000 monthly paycheck and is moving into office space on Harford Road. The renovations, the furniture and half her lease she'll pay for in barter.
Trade exchanges make money in several ways, including a membership fee of $300 or more and monthly fees of $20 to $30. The exchanges sometimes accept some of those fees in barter.
Beyond trying to attract new customers, the exchanges compete to handle the trades. Many businesses are members of both exchanges, but each time they make a trade they pay a percentage of its value to the exchange that handles it. Rishebarger charges 15 percent of each purchase. Constantinides charges 12 percent per transaction, with the buyer and seller each paying half.
Rishebarger said she spends most of her time trying to find ways for clients to spend the credit they have accumulated. She found new awnings for a flower shop, and is searching for a new fence for a client's back yard. For one customer, she found a podiatrist to work on his ingrown toenail.
"If a company has lines around the corner and no slow times and no excess inventory, then they probably don't need barter," Rishebarger said. "But anybody else ."
"They just need to expand their minds a little and understand they're not doing something for free, they're just getting paid in barter dollars instead of real dollars."
According to Tom McDowell, executive director of the Cleveland-based National Association of Trade Exchanges, the best candidates for bartering are businesses with excess inventory -- like the Admiral Fell Inn. If Eckenstein didn't trade empty rooms they would remain empty rooms. The goods and services he gains from barter cost him almost nothing.
But many businesses, particularly when profits are lean, can use barter to cut overhead costs by eliminating charges for things like coffee service, cleaning supplies or office equipment. When profits are up, they can barter for a vacation or buy jewelry -- drawing more salary than their cash flow might allow.
"When things get tight, they barter for things that save them cash," McDowell said. "When things are better, they tend to splurge a little."
Among the concept's drawbacks is that some goods and services are more tradable than others. Rishebarger and Constantinides say they have many consultants willing to trade for a new computer, but not many computer companies are willing to part with their products for free advice.
Is it worth it?
Professionals like doctors or lawyers can face the same problem. Many people want their services, but far fewer offer something they need in return.
"Sometimes I accumulate so many trade dollars that I wonder whether it's worth it," said Dr. Steven Sopher, a Baltimore optometrist who said he serves one or two customers a month on barter. He has participated in barter exchanges for about six years, spending his trade credits on items like carpet cleaning and dry cleaning.
"It can work well if you take the time to make it work," he said. "But it's much easier to sell than to buy."
Still, many area businesses participate.
Holy Frijoles, a Mexican restaurant in Hampden, joined Rishebarger's exchange two months ago and had its menus printed on barter. The restaurant manager estimated that two customers a week pay on barter, so far about $270 worth of food.
The Flower Cart Inc., a locally owned chain of five florists, has bartered about $20,000 worth of flower arrangements since joining the exchange two years ago, according to owner John Fogarty. In return, it got new awnings, had its company picnic catered, spruced up its delivery vans and had some trees trimmed.
"It's one thing to have to come up with $5,000 to paint your building," said Fogarty. "It's much easier to come up with an extra [flower] arrangement now and then."
Pub Date: 10/18/98