May 4, 2001

Greetings! The vacation rental and the computer industries continue to evolve, as technology, business practices, and the economy change in ways none of us can control or predict accurately. It seems time to bring you up-to-date on the status of RPMRS and the related software that Victorex has and continues to develop in an effort to help you run your businesses more efficiently and profitably, and to keep up with these changes.

Much of my time the past couple of years has been directed to understanding and mastering the technologies and software that make the Internet and the World Wide Web what is today, and what it is likely to become tomorrow. I’ll talk more about those efforts in a moment, but first I’d like to review the status of RPMRS with you.

RPMRS Version 3.0 Ready for Release. Some RPMRS projects have languished as a consequence of my Internet work, but I continue to work on RPMRS regularly, adding new capabilities and making existing steps better and easier to use. The result is Version 3.0 of RPMRS, which is running now at Lake Tahoe Accommodations, Vacationville (formerly Resort Systems and Chelan Vacation Rentals) and Sea Ranch Rentals. My objective is to update all RPMRS users to Version 3.0 in the next several months.

A complete four-page list of changes, enhancements and new features in Version 3.0 is enclosed. The primary benefits to using this new software are as follows:

• Improved daily booking report statistics, including monthly gross and net bookings by reservationist.
• Support for Internet online searches and reservations. (Does not include the software required on the web server)
• Extended memo-type comments for every reservation, including mandatory comments for every reservation change and cancellation.
• Optional guest check-in and check-out, including a new report which lists guests due and overdue for arrival, which can be run at any time.
• Greatly enhanced support for multi-office operations (only of interest to two users at this time).
• Numerous "bug" fixes, improved error messages and reports, and new reminders that help ensure that month-end procedures are performed properly, in the correct sequence.
• Automatic check register void entries and check re-creation in the event owner checks are spoiled during month-end processing, in the case of printer jams and other such malfunctions.

There will a fee for this update, plus an additional fee if the check-in, check-out option is installed. I’m expecting all users will agree to this upgrade, as it contains many improvements. Additionally, I can do a better job of support if I have only one version of RPMRS to maintain.

Wait-Listing. I need to mention that wait-listing, something several users have been waiting for for a long time, is nearly complete. The basic program is finished, some testing has been done, and only a few more routines need to be written to make it fully functional. When finished, it will support wait-listing for both Internal Time Exchange and vacation reservations. I am committed to get this project off my "To-Do" list by the end of June 2001.

E-Mail Capability. This item is at or near the top of the RPMRS wish list of several RPMRS users. This is something I expect to have available as part of Version 3.0 in the next few weeks. I’m planning two basic functions for the initial implementation. One will be the capability of e-mailing confirmations, the other will be to e-mail messages to all or selected past and/or future renters.

Credit Card Processing. This may be one project that has benefited by delay, as it has been only recently that an application such as RPMRS could be programmed to utilize the Internet for credit card processing. Some work has been completed, and I expect to be able to offer this capability as an optional capability in early autumn 2001.

Internet Search and Online Reservations Software. It was my judgment three years ago that Victorex had to embrace the Internet, and find ways to extend RPMRS capabilities to the Internet, or else RPMRS would become an obsolete product. The result is, I believe, software that safeguards your investment in RPMRS, and provides you with the option of offering online reservation services on the Internet, easily and cost effectively.

The "secret" of Victorex’s Internet software is that it continues my philosophy that data should be entered only once. When a new unit is added to your rental program, or rates are changed, or a hottub added or taken out of service, this information needs to be entered only once in RPMRS. The data needed on the website are extracted and sent to the website auto-matically. The only exception is that unit photographs must be processed manually, but even here Victorex’s software comes to the rescue. It automatically generates a daily report showing all units that are missing photographs. There is no waiting for your renters or owners to bring the omission to your attention.

Of all the Vacation Rental websites I’ve visited, I believe Victorex’s search engine is the best on the Internet. And it keeps improving. If you haven’t done so recently, visit Lake Tahoe Accommodations website at "tahoeaccommodations.com," and test the search engine. Or, if you would like to see the software running at a smaller resort, check out "searanchrental.com". Here’s what I see as the primary advantages of Victorex’s Internet software:

• Does not provide a list of all units in your rental program that competitors can easily access, and does not reveal the future occupancy of your units.
• Only lists properties that meet the selection criteria, and which are actually available during requested period.
• Calculates exact rate and taxes for selected period for each property, and handles seasonal and other minimum stay requirements.
• Almost instantly provides list of available properties, with sufficient information about each to allow people to quickly find the one they like best, without randomly "clicking" on dozens of property displays
• Makes suggestions for alternate searches that will yield available units when a search comes up empty, whenever possible
• Balances occupancy by putting the least-rented properties at the top of the availability list. This works especially well when properties are graded, and the best units are displayed first.
• Automatic updating from RPMRS.
• Website search and booking activity can be monitored in "real time" from any PC with an Internet connection. No waiting for complex monthly server log reports.

A great deal of time and effort has gone into developing this Internet software. Accordingly, I am treating it as a separate software product, and not simply an add-on to RPMRS. Just as you could not run your business today without RPMRS, or an equivalent software package, you won’t be able to run your business in the future without an Internet online reservations system. The cost to develop that system, and the benefits that will accrue from it, go way beyond what’s involved in just publishing property descriptions and photographs on the Internet. An investment will be required to obtain this new capability, but its an investment that will have a high return. By making that investment now, you will be miles ahead of your competition.

I want to acknowledge the role that Jim Morris of Lake Tahoe Accommodations (LTA) has played in the development of Victorex’s Internet software. First, he contributed signif- icantly to the design concepts that went into the development of this software. Second, LTA has paid a significant amount in programming fees to bring this software to the point it is today. Without that investment, this software would not be available to any RPMRS user at any price. As for it’s effectiveness, you might be interested in knowing that in January 2001 at LTA, this software took in $324,000 of gross bookings, about 75% of which became real reservations. I think that’s really impressive.

Travel Agent Business. An outgrowth of my work at Lake Tahoe Accommodations is a program to allow wholesale tour operators (WTO) and travel agents (TA) to link their websites to LTA’s. This permits WTO/TA customers to book reservations on LTA’s website, under the name of the host WTO/TA company (another Jim Morris concept). This technology makes VRM-travel agent business more feasible than ever before. In the past, selling vacation rentals through travel agents was fraught with problems, because it was difficult to find travel agents that were able and willing to properly rent individual vacation homes. A good website solves much of that problem, as the agent and the renter can "see" the product you’re offering.

Related, one of the companies LTA is planning to work with is Inntopia (inntopia.com), which hosts one of the big reservations websites for independent hotels and other lodging facilities. The folks at Inntopia are interested in offering the rental inventory of all of Victorex’s customers on their website. Call me if you are interested in learning more about this option.

RPMRS on The Web. One of the results of the Internet becoming virtually ubiquitous, is that some old concepts in computing have become economically feasible once again. I refer to computer timesharing, in which individual users dialed into large computers to run their software. There were many reasons why that technology faded, but one of the most important was the cost of long-distance phone calls, With the Internet, that’s no longer an issue. For a fixed monthly cost, most people now have unlimited Internet access, allowing them access to any computer in the world, if it too is connected to the Internet.

This means that RPMRS can now be installed on one of Victorex’s servers, and the customer can run it just as it now runs in your offices, but from any PC anywhere in the world. Subject, of course, to a valid user name and password. Thus, the owner of the business can have direct access to the system while on vacation, "on duty" employees can have direct access to the system at home at night to resolve emergencies, and the like. Perhaps best of all, there is no longer any need for an in-house network in order to run RPMRS. An advantage of this approach is that it facilitates the exchange of data between RPMRS and online reservations web servers. I’m not sure to what degree this will meet peoples’ needs, but I thought I should share the idea with you.

Victorex.com. After several years of offering nothing more than a point of contact, the Victorex website now contains real information. The design is in a state of evolution, and I would particularly like to change the "home" page so that it contains some customer testi-monials. Your help and contributions in this area will be greatly appreciated.

I’d like to refer you to two pages on the Victorex website. First, on the "Software" page, there is a link to a web version of the RPMRS changes list that is enclosed with this letter. There will be more RPMRS-related information here in the future. Second, there is a "Resorts" page that contains a description of Victorex’s customers, with links to their websites. This page is already generating a little traffic for some of Victorex’s customers.

Property Rights Issues. I’ve long supported the work of the Pacific Legal Foundation, and would like to draw your attention to a PLF case now before the U.S. Supreme Court, which is being touted as the most important property rights case since Lucas v. South Carolina Coastal Commission in 1992. The case, Palazzolo v. Rhode Island, has been argued and a decision is expected this summer, The basic issue is whether or not the government must fairly compensate a property owner when it places restrictions on the use of his or her property that diminish its economic value. In my words, the issue is, Who should bear the cost of rightly preserving valuable natural habitat, the individual property owner who happens to own the property, or all of us? Check out the PLF website (pacificlegal.org).

Thank you for your business and your continuing support.

Very truly yours,

John V. Kjellman