Bill O'Connor, who has spent 14 years
running a host travel agency, last year set out to create an
improved version, based on the needs of today's independent
contractors.
He gathered
information from agents in the field, drew a conclusion about what
would make a successful agency (selling high-end leisure), then
partnered with Paula Wagner to create a new business.
The only hitch: It
is not a host agency.
Essentially, it is
a home for independent contractors and other productive travel
sellers who aren't really looking for hosting services as they are
generally understood.
O'Connor said he
learned that a portion of successful travel sellers wanted three
other things: equity in the business that collects supplier
commissions, some influence in how that business is managed and, in
some cases, health and other benefits.
The result is
Travel Square One in Denver, an employee-owned agency, and those
employees include former independent contractors who bought into
the business, have standard employee benefits, have a say in
business decisions and stand to share in any profits beyond
earnings on sales. They share the risks, too.
To realize their
new vision, O'Connor and Wagner restructured the agency as a
limited liability corporation with 25 shares, initially priced at
$5,000 each. No owner can hold more or less than one full share, a
plan that caps the number of possible owners at 25. There are five
salaried staff members among the owners, including O'Connor, who is
the managing member, and Wagner, whose chief responsibility is
training. The other 20 ownership slots will be filled by agents; so
far Travel Square One has three owning agents.
In addition, Travel
Square One is a host agency in the traditional sense for nine
independent contractors.
The new Travel
Square One was born in late 2006 but did not open its doors until
April 1 and brought on its first shareholding travel seller on May
1. Sales volume in the first six months reached $3.8 million.
Existing customers accounted for about 5% of sales, the independent
contractors about 15%. The bulk of sales, 80%, came from the three
shareholding travel sellers.
O'Connor said the
business is 95% to 98% leisure, and a lot of that is on the high
end, in keeping with his original conclusion that upscale leisure
was the way to go. The three owner-agents specialize by destination
and product type, and Travel Square One will look for more
shareholders with strong leisure specialties as well as high sales
totals and high-yield bookings.
O'Connor estimated
that shareholders will each produce $1.5 million to $2 million in
sales annually. Obviously, Travel Square One is a place for
vigorous sellers, not "dabblers," O'Connor said.
Owner-agents
collect all commissions and fees associated with their sales and
pay a $2,000 monthly fee to the business if they work in the home
office. Off-site shareholders pay $1,200 a month.
Currently, two
selling shareholders work in the office. There is enough space for
a few more, but O'Connor expects most new shareholders to be
home-based.
To date, $5,000 has
been the price of entry; after the new year, that figure goes to
$10,000. The difference is a recognition that founding partners
took the greater risks, O'Connor said.
Buyers make a
minimum two-year commitment before they can sell out, O'Connor
said. If someone decides to move on, the company will buy the share
based on a value set by an outside appraiser.
Ironically, the
business plan, which was created with experienced, high-producing
independent contractors in mind, is stimulating more interest from
experienced sellers with salaried positions at other travel
agencies.
As for Travel
Square One's nonowning independent contractors, O'Connor said the
agency has no target number for them because "they are not our core
focus. We also believe there is a limited number of them who work
in high-end leisure."
Travel Square One's
internal system is set up to treat each seller as a branch "so we
can produce full financial reports for each seller," O'Connor said.
Agents can see their productivity by supplier and other
criteria.
Travel Square One
is also creating individual Web pages for each seller, to be opened
to the public soon. Each agent's page will be accessible from the
agency's home page and will be used to build a community of agents
and their clients. The sites won't be used to pitch products or
handle bookings. "We don't believe our sales will consummate here,"
O'Connor said. "But we expect clients will be able to exchange
information."
At some point, the
number of Travel Square One shareholders could rise above 25, but
O'Connor said he and Wagner planned for 25 as a number small enough
to allow all shareholders to keep a close watch on the quality of
investors and services. Travel Square One's first three
agent-owners have given the relaunched company a good start: The
new company is in the black already, said O'Connor.
"I love it," he
said. "I don't have to manage these people."
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Perfect Itinerary
An
upscale tour of Italy
The following is a portion of a
monthlong trip to Italy prepared for a small group by Travel Square
One shareholder David Glanz.
Days 1 and 2: Fly to
Venice (shown at left). Spend three nights at the Pensione Wildner,
a small, moderate pensione near St. Mark's Square. There is no
elevator, but staff will assist with bags. The hotel has a small
restaurant, which is quite good.
Days 3 and 4: Meet your
personal guide, an expert on history and art in Venice, at 9 a.m.
each day for morning tours. She also will make suggestions for
afternoon touring.
Day 5: Pick up your
seven-passenger van at the Europcar office. Note: In Italy, it is
helpful to have an international driver's license because it seems
to considerably reduce the time involved if you are stopped for any
reason. Besides, some jurisdictions are implementing small fines if
they can't readily read your U.S. license. Drive to Verona. Stay
two nights in the historic city center at the Hotel Accademia, a
200-year-old property that was renovated about 10 years
ago.
Day 6: Free day in
Verona.
Day 7: Drive to Ravenna
on the Adriatic coast. Stay at the Best Western hotel.
Day 8: Drive to Bettona,
where you will stay three nights at the Relais la Corte di Bettona.
This small hotel in the town's medieval center is an old stone
building that has been refurbished.
Days 9 and 10: Free days
to explore. The region has many charming hill towns near Assisi and
Spoleto.
Day 11: Drive to a Tuscan
villa for two weeks of sightseeing in the area. A two-day, private
tour of Florence is arranged.