May 18, 2003 - The name -- Hotels.com -- sounds like one of those Internet-related blunders of the late 1990s. 

But this Dallas-based company, name notwithstanding, bears little resemblance to the technology flotsam that now litters the corporate waters. Hotels.com is a powerhouse, a moneymaking machine with real revenue, real profit and a pristine balance sheet devoid of debt. 

The company provides hotel accommodations worldwide via the Hotels.com Web site and through affiliated sites. Its profit soared 458 percent in 2002 from the previous year as revenue increased from just over $500 million to almost $1 billion. 

That performance landed Hotels.com at the top of The Dallas Morning News' ninth annual Fast Track list, a ranking of the area's best-performing public companies. The Fast Track measures companies' 2002 performance in four areas: sales, profit growth, total stock price return and return on assets. 

"We didn't succumb to the Internet bubble," said Hotels.com chief executive officer David Litman. "For one thing, we didn't spend more than we made on marketing, like a lot of Internet companies did." 

No single industry or product dominated this year's list. It was a motley mix of companies that sold things such as hotel rooms, hospice care, computer software and crude oil. 

But a common theme is that these companies focused on a product or service and adapted quickly to changing market conditions or customer needs. 

Hotels.com, for example, changed its name from Hotel Reservations Network Inc. in March 2002 because consumers were often confused by its awkward Web addresses, such as 1-80096hotel.com. Now it has one central Web site -- Hotels.com -- that generates more than one-third of the company's sales, Mr. Litman said. 

Currently, Hotels.com offers hotel accommodations in 350 cities and at more than 8,000 hotels worldwide. Basically, the company contacts individual hotels and negotiates the best rates it can for a block of rooms. It then marks up the price and sells them online. 

Jon Hegranes, vice president of research at Baldwin Anthony Securities in Dallas, said the company benefits from the growth of online consumer hotel bookings. 

Last year, about 7 percent of all hotel rooms were booked over the Internet, but in five years that number is expected to be 20 percent. 

"About twice that percentage book airline travel online, so I think that gap will close," Mr. Hegranes said. 

The No. 3 Fast Track company, Odyssey Healthcare Inc., which provides hospice care to the terminally ill, is not new to the Fast Track list. It was ranked No. 1 on last year's list. 

It's in a different industry than Hotels.com, but the two firms are similar in one important aspect -- providing a necessary service at a fair price. 

The company's sales jumped 49.4 percent in 2002 from the previous year, and profit increased 63.9 percent. Its revenue is driven by its average daily number of patients, which grew from 3,573 in 2001 to 5,094 in 2002, said chief executive Richard Burnham. 

Caring for people nearing death in their homes is cost-effective, he said, and the terminally ill prefer home to the hospital. 

Medicare and Medicaid pay about $115 a day per patient for hospice care, compared with the average daily stay in a hospital of $1,500. Odyssey provides its clients a team that includes a registered nurse, social worker, home health care aide and a chaplain. 

"We pay for all the patient's medications, medical supplies and medical equipment," Mr. Burnham said. 

About 2.4 million people die every year in the United States, but only about 600,000 are served by hospice. 

"Hospice care is becoming better known, but research shows that still 90 percent of all people don't know that Medicare pays for the benefit," Mr. Burnham said. "We still have a long way to go." 

Companies are always looking to cut costs, and increasingly, they're paying other companies to help them tighten their belts. That need propelled Dallas-based Affiliated Computer Services Inc. into the No. 11 spot on the Fast Track list. 

Its sales grew 48 percent and its profit 71 percent in 2002 as companies cut costs during the economic slowdown of the past three years. 

Some of the nation's largest companies, including General Motors, General Electric and American Express, hired Affiliated Computer to run their back-office operations -- payroll, accounting, human resources and claims processing. 

"Outsourcing these processes can save companies 40 to 60 percent," said Lesley Pool, vice president and marketing head for Affiliated Computer. 

Companies save because they don't have to staff 15 payroll clerks, for example, or have an accounts payable department. Ms. Pool said plenty of companies offer advice on where to cut costs, but Affiliated actually does the work. 

"Customers are looking for solution suppliers, not advice suppliers," Ms. Pool said. 

Typically, companies involved in oil and gas exploration make a good showing on the Fast Track list, and 2002 was no exception. Fort Worth-based Encore Acquisition Co. ranked sixth on the Fast Track list, primarily on the strength of its 132.6 percent profit growth and nearly 40 percent stock price appreciation. 

Encore bolstered its sales and bottom line through increased crude oil production. And higher oil prices helped, too, said Jonny Brumley, president of Encore. The company spent $75 million on acquiring oil field properties last year, he said. 

"Our strategy is a little different from other energy companies because we typically buy interests in older fields and put in more wells. We don't wildcat," Mr. Brumley said. 

Crude oil prices basically tracked higher throughout 2002, rising from about $18 a barrel in January to above $30 by December. 

Encore increased its average daily output of oil from 17,208 barrels in 2001 to 20,273 in 2002. 

The company's revenue increased from $136 million to $161 million, or 18.3 percent. In other words, Encore transferred a relatively modest revenue increase into robust bottom line growth. The reason: "Our oil fields have a large fixed-price component to them, so when you add production or get higher prices, it flows right to the bottom line," Mr. Brumley said. 

Wall Street seemed to like this performance, too, because Encore's stock price soared from about $13 at the start of the year to just above $18 by the end of the year. 

The No. 2 company on the list, Collegiate Pacific Inc., saw its sales grow 27 percent over the last year. But its phenomenal profit growth -- more than 19,000 percent -- landed it near the top. The company's net income went from $4,120 to $805,488. Collegiate Pacific markets sports equipment to mostly institutional customers. 

Successful companies know how to please and keep customers, and Richardson-based watchmaker Fossil Inc. has taken that concept to the limit. It has a small army of designers to keep up with the trends of fashion-forward teens. 

Fossil's sales growth of 22 percent and profit growth of 35 percent ranked it fifth on the Fast Track. It held the top Fast Track ranking in 1998. 

"We take kids right out of college with arts degrees, and we teach them how to design watches," said Mike Kovar, chief financial officer of Fossil. "We probably have more watch designing going on in Dallas than in any other part of the world." 

Fossil sells watches and leather products wholesale to major department stores, and it also owns retail outlets, including one in the Galleria mall in Far North Dallas. Fossil products are sold in more than 20,000 outlets. 

One of the keys to the company's success is that it continually adds styles and brands to its product line, all targeting 16- to 24-year-olds, Mr. Kovar said. 

Mr. Kovar said it's important for every brand to have distinct features. 

"Our Armani designers all dress in black and are kind of conservative, but the Diesel guys are kind of edgy and have green hair and metal sticking out of their noses and ears," Mr. Kovar said. "We are trying to keep the image of those brands, even down to the people who design them." 

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