Pegasus Solutions to Expand Commission and Payment Services to Airlines, Tour Operators, Cruise Lines, Car Rental Companies, and Railways

Pegasus Solutions, Inc. (Nasdaq: PEGS) announced today at the World Travel  Market exhibition in London that it is extending its commission and merchant payment processing services beyond the hotel industry. For the first time, Pegasus will begin processing travel agency commission payments from car, cruise and rail suppliers, tour operators, non-ARC affiliated airlines, and other travel-related suppliers. This 2003 service expansion will also apply to PegsPay, Pegasus' new net rate payment service, allowing merchant travel distributors, such as discount Web sites, tour operators, onward distributors, and wholesalers, an opportunity to process streamlined payments for all travel suppliers. Dallas-based Pegasus Solutions is a prominent worldwide provider of hotel reservations-related services and technology.

Pegasus Commission Processing, one of the hotel industry's leading travel agent commission services, was created in 1992, and PegsPay was launched earlier this year.

"This enhanced service offering is the first of its kind - a comprehensive payment and information solution for travel agencies and suppliers around the world. In bringing our expertise and technology to other travel markets, we can use proven practices learned over years of working with hotels and agencies to provide best-in-class payment solutions for air, car, cruise and rail suppliers, as well as tour operators and other travel-related suppliers," said John F. Davis III, chairman and chief executive officer of Pegasus. "Most of the world's leading hotel companies have realized significant efficiency gains from the use of Pegasus' automated services over the past 10 years. The time is right - and the demand is apparent - for other travel industry suppliers to benefit from our commission and payment processing services. Moreover, travel agencies will benefit by getting single, timely payments from multiple industry sources, noticeably decreasing back-office accounting and administrative activities."

"We're pleased to see Pegasus take this important step - not just for our agency, but for the travel industry as a whole," said John Coffman, vice president and corporate controller for Navigant International. "Pegasus enjoys a well-deserved reputation for delivering revenue-enhancing commission services for agencies. The expansion of its payment processing services beyond hotels will deliver efficiencies and cost savings to agencies and suppliers at a time when both critically need every service that helps improve the bottom line."

Among a host of accompanying technology upgrades, Pegasus intends to Web-enable three key components of its payment processing services, allowing agencies, merchants and suppliers to go online to: 

* send reservation and payment information in industry-standard formats using proven data migration techniques;

* access critical, analytical commission processing and supplier relations information; and

* monitor reconciliation and tracking of commission and net rate payments for suppliers, merchants, and agencies.

Pegasus customers will be able to choose a payment schedule best suited to their unique and dynamic requirements through a flexible, newly configured payment process, allowing for enhanced cash management practices among all parties.

This announcement comes shortly after Pegasus introduced PegsPaySM, an ASP-based net payment processing service for travel businesses that operate under a merchant business model. "With the addition of commission and net rate processing for non-hotel suppliers, Pegasus now offers an unrivaled combination of automated payment processing services across all segments of the travel industry," Davis said.

"We're enthused about the initial reaction of non-hotel travel suppliers to this service expansion," said Jeff Bzdawka, senior vice president of Pegasus Financial Services. "Our analysis shows that, excluding airline commissions, travel industry suppliers paid approximately $5.7 billion in gross commissions in 2001, only $1 billion of which was paid by hotels. The sheer volume of paperwork and resources associated with these commission payments today demands an automated solution. This extension of our commission and payment capabilities once again demonstrates Pegasus' leading role in the arena of automated financial services for the travel industry."

For the commission payment process, Pegasus collects complete travel booking information related to reservations made by travel agents and travel Web sites that are members of Pegasus Commission Processing (formerly HCC). Pegasus then combines all participating supplier information and commission payments, and sends a consolidated report and payment to each member.

Pegasus Commission Processing agency members may receive payments by check or electronic transfers in their preferred currency. Electronic or printed statements are available with details by brand and by suppliers. Agency reports also include valuable information on non-revenue stays, covering items such as client no-shows or travelers who altered their original travel plans. Throughout the payment process, both suppliers and agencies receive added value assistance from Pegasus' four Commission Research Centers around the world, dedicated to helping both parties track payment inquiries and communicate timely resolutions.

"Our agency members and PegsPay merchants strongly encouraged us  to create this new service offering," continued Bzdawka. "After multiple membership surveys and two meetings with our Agency Advisory Council, it is clear that our members support this initiative. In fact, many of our member agencies have already signed agreements giving them access to our expanded supplier commission services as new suppliers come online. We're convinced that 2003 is the time to make this idea a reality, and we're committed to expanding our service offerings while maintaining and improving our everyday service levels."

Pegasus provides commission processing services to travel agencies in more than 200 countries, including the 10 largest U.S.-based agencies and eight of the 10 largest agencies in the United Kingdom. By participating in Pegasus Commission Processing, travel agencies can grow their commission revenues, as well as achieve cost savings due to a sizable reduction in expenses associated with typical manual methods for managing hotel commissions.

With the majority of travel agencies worldwide as members and more than 35,000 participating hotel properties, Pegasus processes an average of $41 million in travel agent commissions per month on behalf of more than 110 hotel companies in 159 countries.