Agent Issues Consortia take issue with ASTA report findings By Laura Del Rosso / February 15, 2011 Share 1 -- ASTA’s annual Supplier-Travel Agent Marketing Report indicates a small four-year decline in the percentage of travel agencies belonging to consortia, but those findings don’t match reality, say leaders of the agency networks. ASTA’s survey uses a "Research Family," a representative sample of 525 ASTA agency owners and managers. Some 441 participated in the 2010 research, said Melissa Teates, director of research. In 2006, 85% of survey participants said they belonged to a consortium. That percentage nudged down to 81% in 2008 and then slipped to 78% in 2010, a drop of 7 percentage points in four years. (Click on left chart.) While a small change, it left many scratching their heads. Teates said the survey did not ask other questions regarding consortia participation, so the reasons behind the decline are unclear. "Some people say that the economy could have had some effect in the decline in 2010," she said. "In a different survey we asked about trends and have looked at what changes agencies are making. Most of the time people talk about cutting operating costs, dropping GDS usage and that kind of thing. So, it could be that cutting involved dropping consortium membership." However, while agency networks are seeing a lot of "churn"— turnover in membership due to agency closures, mergers and moves to host agencies or other agency groups — they aren’t witnessing members dropping participation to go it alone. "We see agents who have been Main Street stores changing their business model and moving to a centralized solution with a host agency," said Stephen McGillivray, Vacation.com’s executive vice president of marketing. "Sometimes they are using a host for fulfillment and they are no longer a member of an agency group. But the host probably is a member. We have large host agencies who are members of V-com, such as Nexion. The people who answered the survey may have changed their business model. They may not recognize it, but they are still a member of a consortium." Midwest Agents Selling Travel, a 188-member Oakbrook Terrace, Ill.-based consortium, has seen no decline in interest. "I was surprised to read those survey results because I thought it was the other way around," said MAST President John Werner. "The number of agencies that are not affiliated is shrinking because people need more support. In MAST, we have seen people who have closed up shop and gone to work at home but they have kept their MAST membership." He added: "I’ve had conversations with members who wanted to give up membership to cut costs, but they always eventually have gotten it: You lose more money in the long run because of the value you receive from belonging to a consortium." Alex Sharpe, Signature Travel Network’s executive vice president, said interest in the Los Angeles-based group is high. Sharpe, who recently joined the consortium from the supplier side (Regent Seas Cruises), said, "Some agencies may be shortsighted and drop affiliations because of costs. Because of our business model as a cooperative, the costs are not a barrier. And the tools and amenities that suppliers provide to Signature and other consortia are such an advantage that agencies who aren’t affiliated are at a competitive disadvantage. We just don’t see any lack of interest. We turn down more people than we can take." Jack Mannix, a former Ensemble Travel president who now runs a Florida-based industry consulting firm, said he would be "concerned" to hear of agents reducing operating costs by dropping out of consortia. "There’s no question that overall numbers of retail agents have declined dramatically and many have changed their business model," he said. "But whether they are traditional agents in an office building or working from home, they get so many benefits from consortium membership. That should be one of the last things you cut. A lot of these groups are not overly costly to belong to, and the expense should be viewed as a value." Mannix said that agencies are leaving consortia because of a change in their business model, typically to join a host agency, but they are still affiliated. "People decide to close up shop and consolidate with someone," he said. "That location disappears, but the volume flows through the host agency, which is a consortium member. It would be a quick jump to conclusion to assume that agents are migrating away from the consortium model. I don’t think many agents see a benefit in that." Scott Pinheiro, president of Santa Cruz Travel of Santa Cruz, Calif., and longtime member of the Western Association of Travel Agencies, said he would be surprised to find agencies seeking to go it alone. "You would have to be a pretty bad businessperson not to see the return on investment from belonging to a consortium," he said. "People are relying more on their consortia in hard economic times." This report appeared in the Feb. 14 issue of Travel Weekly.