Tour Operators Group business is a lost opportunity for many agents By Michelle Baran / October 18, 2011 Share 1 -- It seems like simple economics: Book a group of people rather than individual passengers and make more money. But finding and making travel arrangements for these at-times elusive — or perhaps exclusive — groups has proved a challenge for many agents. Suppliers and group specialists alike say that adds up to a missed opportunity. "You’re crazy if you don’t do groups," said Ken Schwinn, owner of Schwinn Tours & Travel in Bonita Springs, Fla. "Financially, it can be very rewarding because not only do you have a number of people traveling on the same itinerary but you’re also upping your agency into a higher commission bracket." Schwinn, who has been working with groups for more than three decades, got his start as a teacher traveling with student groups. He eventually opened his own agency, and groups now account for 50% to 60% of his business. "For a small, home-based agency such as ourselves, without a host, you can build up your commission level and your visibility with a supplier," Schwinn said. There appears to be a strong divide in the industry between those in the groups market, who generally shout its profitability from the rooftops, and a large part of the retail travel community who for various reasons have hesitated to enter this market. "There’s a huge group market out there that, for whatever reason, the agents have passed over," said Charlie Presley, chairman and founder of Group Leaders of America, or Glamer. "I have never understood why. You really gotta go out and sell. They’re not going to come to you." (Click the chart to see Glamer's survey on the makeup of groups.) As the economy continues to sputter and uncertainty grips the industry, those in the groups market tout its potential for agents looking to increase revenue opportunities. One supplier that is pushing harder into the groups market and hoping to bring agents along for the ride is the Globus family of brands. Groups business, which in 2003 represented about 9% of Globus’ total business, today is "well north of 15%," according to Mike Schields, managing director of groups and emerging markets. "Given our size, these percentage increases represent significant numbers, Schields said. "We have seen steady year-over-year percentage growth." Schields acknowledged that 2011 has been a bit more challenging due to airfares, economic concerns and unrest in the Middle East, among other factors. Even so, he said, as of August, group bookings for 2012 are up 20% over this time last year. The growth in the groups market has been attributed to several factors, not least of which is the desire of baby boomers to travel with friends, family or affinity groups such as church or special interest organizations. What they all have in common is that they’d rather travel with a group of like-minded people. Group travel means different things to different entities. Depending on the tour operator or travel provider, groups and group benefits vary. Many operators and suppliers have group leader policies that entitle one person, generally considered the group leader, to free travel when they book a minimum of, say, eight to 12 people. But groups can be as large as hundreds of people traveling together for a special event or with a shared purpose. Within the group travel space, there are also custom groups and group bookings on existing departures and itineraries. While groups usually require a certain degree of customization regardless of the type of booking, custom groups require a different investment in time and research than booking a group on a brochure departure. "By and large, selling groups on scheduled departures is easier," said Richard Launder, president of TravCorp USA, whose larger brands — Trafalgar Tours, Insight Vacations, Brendan Vacations and Contiki — all have groups departments. “The itinerary is already in place, and it’s just a question of how many seats you want. The market sort of looks to buying in on prescheduled departures because so much of the work is already done. "That said, there are lots of different interest groups that want to do their own thing. At that point, the tour operator has to decide whether they’re in [the custom tour business] or not." While custom groups require significant resources, Launder said, "If we can offer a customized itinerary and deliver it very well for them, the chances are they will want to come back a third or fourth time." Groups represent about 15% of TravCorp’s overall business. The bottom line, Launder said, is that “custom groups and scheduled groups aren’t going to go away." "I wouldn’t want to operate ... without a groups department. Not now. It’s been an ongoing trend," he said. "In the last five years, there has been a far greater desire for my own product, for my own tour." Clearly suppliers are aware of the realities and opportunities this market represents. Eighty-two percent of the National Tour Association’s members offer custom tours, according to the NTA’s chairwoman and CEO, Cathy Greteman of Star Destinations in Iowa. "It’s really a growing part of the industry," Greteman said. Group travel falls into several categories, including friends and family; student or educational groups; social groups; church- and faith-based organizations; local banks; park and recreation centers; residential or retirement communities; chambers of commerce; special interest groups, such as wine, food or language; and affinity groups, such as local clubs and alumni organizations. The group challengeWhile the opportunities seem obvious — who wouldn’t want to book 10, 20, 200 travelers and make a bundle on a one-shot deal? — there’s a reason a lot of agents are holding back on the groups business. "There’s no question that it’s a great opportunity for agents to make additional money," said Dan Sullivan, president and CEO of Collette Vacations, for which groups represent more than half the company’s business. But, Sullivan cautioned, "It’s not easy. It’s a complicated field. It’s a lot of work; you have to have the marketing materials. And a lot of these groups only do day trips. And the agents don’t have time." Consequently, he said, "Many agents have avoided them." Indeed, Melissa Teates, ASTA’s director of research, said groups does not represent a big chunk of agencies’ business. "They just don’t do it, because there’s just not that much business for them," Teates said. For one, reserving a block of space on a tour or cruise or chartering a ship requires a lot of capital up front. "It can be capital-intense to do it, and it’s also time-consuming," Teates said. "If groups come to them, they do it. But it’s a niche business." Karin Viera, vice president of sales at Vacation.com, said that about a third of the consortium’s members do groups business. "Groups are very profitable and popular with the cruise-only agencies and agents who sell cruises," Viera wrote in an email. But while admitting it’s a profitable travel segment, she added, "Some cruise lines have made it more difficult, with tighter restrictions, tougher deposits [and] FIT rates that undermine group rates." As tour operators adapt to the changing travel landscape, many have begun offering group travel options as a way to grow their own businesses as well as to help agents increase tour bookings. Schields said that while it might seem "very obvious for agents to pursue groups, many in the past have been discouraged by the lack of materialization, combined with the extra workload that is involved." "Time is money to most agents, and when it comes to groups, the sales cycles can be very long, sometimes 18 to 24 months," Schields said. "There are very few shortcuts." Further, he said, "For some agents that have established clientele over many years, it might not make sense for them to invest in groups. Perhaps their business is primarily individuals, and if that is the case, it certainly can be more profitable to continue down that path." One big difference between the groups business and individual passenger bookings, according to those in the groups industry, is that agents really have to go out and find groups business. It isn’t just going to walk in their door. But, Schwinn said, "I’ve done all kinds of groups to all kinds of places in the world. It is more work, but it’s certainly not more work than [booking] 30 couples to 30 individual places." Finding the pied piperGroup travel is dominated by that curious character: the all-powerful, much sought after group leader or group planner. "There is always one person that makes it happen," said Glamer's Presley. "How do they become the leader? They just have the right personality. ... They are not professionals. These are mostly volunteers. This is not a paid position, this is not a business. They don’t pay for their own trip. "There’s very few of them that are in it for the business. This is community outreach. They enjoy the ego drive with being the leader. They like the fact that people follow them." Still, Presley said, fewer than 2% of all group leaders are travel agents, and therein lies the opportunity. Glamer works with some 25,000 group leaders, whose groups on average consist of just under 200 people, meaning they represent about 5 million travelers, Presley said. That also means they’re coveted by suppliers. The key for travel agents to tap into this business, Presley said, is to "identify a leader of the bowling club and offer them services, do something they don’t want to do. The agent already knows how to take care of the travel needs. The big thing is they need to identify the leader of the group, and convince them it’s a service they need." Indeed, Brenda Newsome, owner of Newsome Travel, in Hartsville, S.C., credits her success in the groups business, which accounts for more than 50% of revenue, to tapping into the community and acting as a group leader much of the time. "I have a big contingency of people in this small town of people who love to travel," Newsome said. As for other agents trying to tap into this market, she said, "They just need to find some affinity groups through the churches or YMCA. They could start with cruises, which would not be very expensive at all. You could start small, then the word spreads and then it goes."For news on tour operations, wholesalers and river cruising, follow Michelle Baran on Twitter @mbtravelweekly.