Nevada awarding tax incentives to two expanding Las Vegas companies

David Strow

Friday, Feb. 16, 2001 | 11:18 a.m.

Expedia loss narrows

Expedia Inc. posted mixed results for the quarter ending Dec. 31.

The company's net loss widened by 9 percent for the quarter, to $25.3 million, but the loss per share fell 17 percent because of a big increase in shares outstanding. Revenues increased 347 percent to $79.7 million.

Cash flow results also improved. When non-cash charges are factored out, Expedia lost just $2.6 million, or 6 cents per share, compared to a loss of $5.9 million, or 16 cents per share.

The heavy increases in revenue were partly caused by several acquisitions, including the buyout of Las Vegas-based Travelscape.com.

A pair of Las Vegas Internet companies received more than $550,000 in tax incentives from the Nevada Commission on Economic Development this week.

For its investment, Nevada expects big growth from Travelscape.com and 21st Century Financial Services Inc. The two companies plan to add more than 400 jobs between them in the Las Vegas area over the next 12 months.

Average wages of these jobs both come in ahead of the state's average hourly wage of $14.61, considered the state's litmus test for awarding tax incentives. The commission's role is to provide tax breaks to companies bringing high-paying, non-gaming jobs to the state.

The largest incentive went to 21st Century, a year-old start-up company. After starting with 18 employees in September, 21st Century has grown to 138 employees -- and, by December 2001, plans to have at least 315 employees in Las Vegas, at an average hourly pay of $15.69.

"We feel that (employment) number is very conservative," said Grant Perry, president of e-leat.com, a division of 21st Century.

The company has offices near Meadows Mall in Las Vegas and in Green Valley. Currently, the company is in talks with the City of Las Vegas to locate its headquarters at a proposed technology center downtown.

For 21st Century's $4 million investment in computer equipment, software and telecommunications equipment, the commission approved a $290,000 abatement of sales, business and property taxes, $81,000 in additional tax deferrals and more than $48,000 in training funds.

21st Century executives describe their company as a business-to-business, Internet-based service provider to the mortgage, banking and financial services industries.

"The banking and financial services industry is in need of change, the type of change which only technology can bring about," said Bill Dendiu, executive vice president of marketing for 21st Century. "We believe our system will help revolutionize the financial services industry."

Dendiu described the product as a "one-stop shopping experience" for companies in the mortgage business, from the origination and approval of a mortgage application to the purchase of insurance and the turning on of utilities. These services, offered by strategic partners, will be offered through an Internet-based browser product, with 21st Century collecting transaction fees. The company hopes to launch the product by April.

Much of the company's hiring has been of software developers, though the company is also picking up call center workers, loan coordinators, trainers and sales staff.

"I think we're in the same boat as everyone else (in hiring)," Perry said. "The talent pool in Las Vegas is being worked very heavy right now, because of new companies coming in. We've recruited some from out of state, and used our influence locally to entice some people we've known personally to come on board."

But Las Vegas made sense as a home for 21st Century because of the area's rapid growth, which creates more demand for the firm's mortgage product, Perry said. He also said the company was attracted to the city's geographic location and flight access.

"Nevada is trying to make itself more inviting to the e-commerce industry," Perry said. "This is a fantastic position, both because of the economic climate and its logistical position."

Also laying out growth plans is a name more familiar to the Las Vegas business community -- Travelscape.com, a locally-founded company acquired one year ago by Microsoft Corp.-controlled Expedia.com. Travelscape now employs 305 at its west Las Vegas offices, and plans to hire an additional 100 over the next 12 months at an average hourly wage of $15.03.

For its $1.8 million investment in equipment and software, the commission awarded a tax abatement of $93,000 and $40,000 in training funds.

Michael Reichartz, vice president of Travelscape, said the new employees will help support an initiative by Travelscape to expand its online travel reservations business. Currently, users can book airplane tickets, cruises, hotel rooms and rental cars through Travelscape -- in the future, Reichartz said, the company hopes to add an entire spectrum of leisure products, such as spa tickets, golf tee times, shows or attraction tickets.

"It's anything you can think of as to why someone would come to a destination and what they would do when they get there," Reichartz said. "That clearly requires a greater commitment on our part to the customer."

That means more developers, call center employees and back-office personnel. But Travelscape is out of room at its West Sahara offices, so Reichartz said the company is currently hunting the Valley for a new home to accommodate its future growth.

"We are limited (in hiring) by our office space until we move into a new facility," Reichartz said.

Expedia has offices across the United States and Europe, from Seattle to London and Frankfurt. Yet it chose Las Vegas for the expansion because of a "commitment" to the city, Reichartz said.

"Travelscape, over the years, has made a commitment to the city in terms of growing and supplying more jobs," Reichartz said. "(When the company was sold), there was a commitment to keep it here. The folks at Expedia love Las Vegas. They like what we're doing down here."