Value-Added Communications, a company known mainly for its hotel telecommunications services, has branched into a completely different service: rolling out automated teller machines for hotels.
The Dallas-based company has contracted to install ATMs in 300 hotels, including units of Marriott International Inc., in an effort to create the first nationwide cash withdrawal network specifically for hotel guests.
Value-Added has already placed terminals in three Dallas hotels: the 1,600-room Loews Anatole, 450-room Adolphus, and 430-room Westin Galleria.
The company's executives are anticipating rapid growth. Plans call for arrangements with the 1,000-room Boca Raton Resort and Club in Florida as well as a select group of Marriott corporate properties.
At Least 400 Rooms
After an August test run at five hotels within the Texas-based Pulse shared automated teller network, Value-Added's executives decided to limit their partnerships to hotels with 400 or more rooms, to ensure high transaction volumes.
"There are also certain destinations, like Orlando, where even the smaller properties could provide the necessary volume," said senior vice president Reed Hancock, who was recently hired to build and manage the system, called Inn Cash.
Mr. Hancock is a former general manager of Valley Electronic Services Inc., a bank automation company recently acquired by Bank of America.
A $1.95 Surcharge
Besides Pulse, Value-Added is currently working with the Honor and Star ATM networks, and executives are negotiating to sign most of the other dozen or so dominant regional networks. Since the Inn Cash network makes a surcharge of $1.95 per withdrawal, it will not connect with Plus and Cirrus, national networks affiliated with credit card associations. Plus (Visa U.S.A.) and Cirrus (MasterCard International) do not allow surcharging.
Value-Added is using Interbold 1060 cash dispensers from Diebold Inc. The service company has also contracted with the Wells Fargo and Loomis armored car companies to provide support for the machines.
Value-Added officials would not reveal their banking or transaction processing arrangements
"We are positioning a product that surcharges," Mr. Hancock said. "Banks don't look upon that as favorable."
The ATMs use dial-up communications rather than the dedicated lines used by most banks to carry transactions. This method is slower, but costs less than dedicated lines. Also, Value-Added intends to replenish ATM cash supplies when they are exhausted, as opposed to the scheduled replenishments followed by most banks.
"We have a fundamentally different approach to dealing with ATMs," said David R. Henkel, Value-Added's chief financial officer.
Mr. Henkel said the program will not be competing with banks, as the terminals will not be in the same locations.
According to Stuart R. Bloom, executive vice president of Carmody & Bloom, a Woodcliff Lake, N.J., consulting firm, the true test of the program will be the volume generated in busy hotels. Although the hotel industry is a relatively "closed market," signing the larger hotels at popular destinations could be crucial.
In the late 1980s, he said, the trend toward placement of ATMs at sites other than bank offices slowed. Since then, Mr. Bloom said, the cost of deployment and support has decreased and consumers have adjusted to the everyday use of off-premises terminals.
"There seems to be a real resurgence in off-site placement at nonbanks," Mr. Bloom said. "They are more of a ubiquitous kind of service - people look for ATMs."
The terminals should be in the first 300 hotels by June, Mr. Hancock said, and he hopes the program will be in 1,200 by the end of next year.
Value-Added Communications started up about five years ago, providing telephone services for hotels. However, Mr. Henkel says, the company has recently "migrated from the mature zero-plus business" - the name refers to the phone dialing sequence - to other services, such as handling collect and debit calls for prison inmates.Inn Cash at a Glance Hotels incontract 300 Participatingnetworks Pulse, Honor, Star ATM supplier Diebold Goal 1,200 hotels by 1995