Agent Issues Finding the sweet spots in the travel industry By Nadine Godwin / April 15, 2009 Share 1 -- Amid a barrage of unrelenting bad news on the economic front, it's easy to lose sight of the fact that some parts of the industry are holding their own, even flourishing. Here's a look at what's working and what's making money. Meg Austin used to love arranging travel for honeymooners, but these days they're "grumpy." They nitpick like never before, she said. Recently, after Austin arranged a double upgrade at a hotel and made dinner arrangements for one couple, "the bridegroom called to complain that his seat on the airplane did not recline," she said, "and the limo was not what he had envisioned." On another occasion, the bride called from her honeymoon to complain that there was a dust bunny under the bed. An exasperated Austin, who does business as Meg2Book, an independent contractor in Denver, responded brightly, "Call housekeeping or give it a carrot." These indeed can be trying times. Agents are working harder, often for less income. Everyone wants a deal, preferably at half the best quote available. But prices often have already been cut, which lowers yields for retailers selling commissionable products. Compounding that effect, some customers are downgrading to still-cheaper trips than they might otherwise buy. In addition, agents have to work longer with many customers before they will "pull the trigger," as James Berkeley, president of Destinations & Adventures International in Beverly Hills, Calif., put it. And then there are the customers who won't buy anything this season, either because they're out of work, they feel guilty about spending the money or they believe it is wiser to hold their cash despite the good prices. A brighter side?Such challenges might seem to define the stark reality of today's market, but the news isn't all gloomy. Indeed, the same facts can be viewed in a more positive light. Agents dislike the poorer yields, to be sure, but they would rather sell travel than not. Jack Mannix, president of Ensemble, said that by early March, his members were "happy just to be selling travel, as opposed to the fourth quarter when very little was happening." Not unreasonably, agents figure it's better to have clients in the habit of buying travel, even at low yields, and keep their agencies poised to serve them when they are ready for more upscale purchases later. On the other hand, the drop in prices means clients who don't need to cut their budgets can buy products they never dreamed of, and that has promising ramifications for the future. "We get a better response with luxury and high-end products now available to the midrange buyers like never before," said John Krieger, president of Cruise & Tour Center in Dallas. "So our passenger numbers are down, but the average price per sale is up," as are yields, he said. At the same time, luxury cruise lines have expanded their markets, Krieger said. "Once people experience that product, more people will aspire to buy it at higher prices later." It is comparable to moving clients to a balcony cabin, he said, after which "they never go back" to the cheapest products. Clients' reluctance to book quickly is frustrating, but the industrywide late-booking trend gives reason to hope for more robust booking activity before the peak summer season. Susan Sparks, an adventure travel specialist who operates Points of Interest Travel in Aspen, Colo., admitted, "It's really tough right now." But, she added, "I feel there will be a lot of last-minute decisions to travel. For my clientele, travel really is a lifestyle and a necessity, and the time will come that they can't sit still anymore." Sparks is an independent contractor affiliated with Brownell Travel in Birmingham, Ala. As for Austin, whose business is affiliated with the Travel Society in Denver, the nearly recession-proof honeymoons are good business, even if newlyweds are a little touchier than usual. She also finds success with families by playing to what she calls the "pre-empty-nest syndrome." "I say, 'You will have these teens for only a couple of more years. You have to go.' And it works!" It doesn't hurt that Austin specializes in a slice of the adventure travel market, scuba diving and skiing. For her clientele, she said, "The adventure is an addiction." However, if the family travel can wait, those trips are more vulnerable. Judy White, a family travel specialist and owner of Wilton Center Travel in Wilton, Conn., said this segment is suffering along with the rest of her business, with the exception of multigenerational trips, which are "holding their own." Multigenerational trips are often paid for by the senior members, who might figure they can't wait too long. There is a once-in-a-lifetime, or a last-chance, aspect to them. The perception of once-in-a-lifetime choices also affects the choice of destination, which offers agents some unexpected opportunities. "Exotic is about the only thing that is selling right now, the places that people consider the trip of a lifetime," said Bob Whitley, president of the U.S. Tour Operators Association. "Now is the time to go, because they may never have another chance at current prices. Egypt is No. 1 on that list. South America is being discovered, too." Data from the United Nations World Tourism Organization bear out these points. In 2008, the three fastest-growing regions were the Middle East, at 11.3%; Central America, at 7.9%; and South America, at 5.9%. Worldwide growth was only 2%. Berkeley, at Destinations & Adventures, specializes in the Middle East. For him, "business is not so bad," and Egypt is the "locomotive." For his upscale clients, "travel is a lifestyle," though some are more cautious about their spending and some might travel less often. Latin America specialist Robert Becker, managing director of Protravel Active Adventures in New York, said he's as busy as he's ever been. His business to the region is up, he said, but that follows a very quiet period in late summer and early fall. Coming into the new year, Geographic Expeditions saw improved sales for the Galapagos and Patagonia, said the company's president, Jim Sano. Some windows of opportunity are even narrower. For example, Sano said Antarctica was up 33% this year, and there was an "inexplicable" mini-surge in travel to Iran. Sano said 2009 bookings are triple last year's. "The numbers are not huge, but it is about $600,000 in sales for us." Then there is the 30-person special-interest group Casto Travel is assisting with $150,000 worth of ground arrangements for a fishing trip in Alaska. According to Marc Casto, president and COO of the San Jose, Calif., agency (No. 47 on Travel Weekly's 2008 Power List), his clients are economists, nearly all of them public speakers. "Apparently, in these dour times, the continuing need of cable news to have experts tell us how bad things have gotten is treating some people well," Casto observed dryly. Clearly, there are sweet spots, large and small, for the trade. Here's a look at three that seem just a little sweeter than most, each for a specific reason: Adventure travel, because its adherents are passionate about their experiences; Honeymoons, because newlyweds are loathe to give up this special trip; Cruises, because the prices are so good. Adventure travelJohn Golicz, CEO of Connecticut-based Unicomm, which owns and produces travel shows, said the firm was "quite concerned" about how adventure-focused shows would fare in today's climate. But attendance in Washington kept pace with 2008, and it rose in Chicago and Los Angeles. The D.C. and Chicago events were part of the Adventures in Travel Expo series, and the Southern California event was the Los Angeles Times Travel & Adventure Show. Golicz said more than 45,000 people attended, including some 1,700 to 1,800 travel agents. Historically, 73% of attendees at these events buy travel while there or based on something they learned at the shows, spending an average of $6,174, according to COO James Forberg, and the company expects a similar buy-and-spend rate in 2009, based on preliminary survey results. Adventure travel is taking some hits but nevertheless sells better than other products, said Shannon Stowell, president of the Adventure Travel Trade Association, because it is "more immersive, which means these travelers have more passion." Stowell said ATTA tour operators expected the middle of the adventure market to perform best this year, but so far it is stronger at the high and budget ends. The organization released research in mid-March indicating that 61% of its tour operator members expect business to be off this year, but two out of five still expect to match or exceed last year's sales. Fifty-nine percent said they had cut prices or added components to support sales, and 57% said they were getting more requests for shorter versions of existing itineraries. As for the type of trips, 45% reported more requests for activity-based options; 39% got more requests for cultural-based adventures; and 28% got more requests for voluntourism. Adventure travel has many definitions, although its adherents can be said to know it when they see it. The broadest definition includes cultural and heritage travel, and the relative strength of adventure travel refers to all types. Although the numbers are small, Whitley said that for USTOA members, packaged soft adventure has been "the fastest-growing segment of the industry for the last 10 years," reflecting Americans' changing interests. Travel agents are key distributors for USTOA member products, but "hard" adventure is an often unexploited sweet spot. Karen Jettmar, director of Equinox Wilderness Expeditions in Anchorage, said she "values what agents do to assist their clients," but the trade has seldom been a source of bookings for her trips into Alaska's remote wilderness. Her business is down, but she projects some last-minute recovery because her clients "are unwilling to give up some sort of adventure," and they want to be witnesses to climate change in a destination where it is an in-your-face experience. Outdoor Adventure River Specialists, an operator with an emphasis on water-based action, expects to see more late booking, too. Mindy Gleason, reservations manager and an expert on river rafting, said sales currently are down "slightly," but customer surveys show most of the company's active travelers plan to book eventually. Many are downgrading with domestic and shorter trips. O.A.R.S. gets less business from agents "than we would like to see," she said. Sano said agents account for 12% of Geographic Expeditions' business, down from 23% more than a decade ago. It's a "missed opportunity," he said. He added that "the successful travel agents in this area have to have a personal interest in this kind of trip themselves," because it makes them better able to match products to prospects. Among the specialists interviewed for this report were agents who had either just returned from or were headed to Bhutan, Egypt, Israel, South Africa, Tanzania and Iraqi Kurdistan. Meg2Book's Austin is as much scuba fanatic as travel specialist: "If I don't get under the water about every eight weeks, I get wiggly. I can't sit still. I need to be under the water. ... It is an addiction." As she prepared to head to Vail to sample new late-season snow, she admitted, "Skiing helps, but does not conquer" a case of the wigglies. Gene Lashley, president of Century Travel in Atlanta, said he and his staff keep up their travel to exotic and distant destinations, and the reports and photos they email to their best prospects describe the trips they happen to be on and provide links to relevant destination websites. This works "very well," he said, adding that the email sent during his recent Bhutan trip produced queries from an "amazing number of clients." Like many an agency client, even Lashley's well-heeled customers are booking later, choosing shorter trips and spending "slightly less," but his adventure business is good just the same. Adventure travel sales at Explorations in Atlanta are down, so Betty Jo Currie, travel consultant and partner, decided that the slow period was an opportunity. In early March, she took her 78- and 80-year-old parents on their first trip to Africa, for a safari in Tanzania. That trip was "so worth the expense and effort," she said. "It is hard to move people if you don't have the enthusiasm." She said she aims to promote to clients based on her recent experiences and, in particular, to "use the age issue" to promote the "life-affirming and head-clearing" benefits of travel for people of all ages. Besides, she said, the seniors "are the ones with the money." Currie's adventure specialty emphasizes Africa, but she also organizes river rafting for groups. Selling rafting trips is not lucrative enough, she said, so she will consult with individual prospects for a fee, then send them to book directly with the operator. Protravel's Becker specializes in luxury adventure and diving, as well as in Latin America. Just back from Israel and "fabulous diving" in the Red Sea off Sinai, he said he was constantly diving with his ground operators around the world, where "I can see how they interact with clients." That personal knowledge of diving and the destination paid off big time in March. When Qantas launched a major fare sale, Becker, calling himself "a little bit of a shark," immediately hatched two dive itineraries for four groups of 12 each to Australia and Papua New Guinea without waiting to consult his ground operators and offered the tours through other retailers as well as Protravel's own agents. By March 27, three were full and he knew he would fill the fourth by the March 31 ticketing deadline. The bottom line for Becker: The customer count is up, but he is working harder because he is determined that "the draconian economy won't deprive me of my ability to make a living." He said he was more involved in all the trip details these days because customers are scrutinizing every cost. He attributes his ability to combine an adventure specialty with a growing destination region to fate. Becker said his great-grandfather came to the U.S. from Russia via Italy. However, his great-aunt and family had disembarked from their ship in Italy and returned to port to find their vessel had left. They boarded the next America-bound ship only to discover it was headed to South America. They landed in Argentina and never left. Their furniture arrived in New York on the first ship, and today Becker has it. But his family's diaspora fueled his enthusiasm for South America, to the benefit of his business over the long term. He sees his relatives in Argentina regularly, and one cousin buys active adventure vacations from Becker, "because we're good." Honeymoons For the most part, newlyweds are not giving up their wedding trip, agents say, but they may be spending less and taking longer to make the final arrangements. Honeymoons survive because couples see them as once-in-a-lifetime trips, and the cost is often financed by families or wedding gifts. A few agencies, such as Casto Travel, sponsor a honeymoon registry for the latter purpose. Honeymoon specialist Cookie Anspach Kohn, co-director of Valerie Wilson Travel in Highland Park, Ill. (No. 29 on the Power List), said, "Overall, it is a good business, but closing takes longer, and most people are spending less." In a few cases, she said, couples are cutting back on the honeymoon because they can "take this opportunity to buy a house." Nevertheless, she said, her clients "are people who feel travel is important. ... There are some incredible trips where people can still spend the money." Richard Beck, president and CEO of Classic Travel Service in New York, finds the couples harder to please these days. They "are never satisfied," he said, "and ask for special deals above and beyond" the discounts and amenities offered. Yet, he is happy with the knowledge that "everything else is slowing down, but there will always be honeymoons." Honeymoon destinations continue to be wide ranging. According to Joyce Horowitz, an independent contractor with New York-based Altour (No. 21 on the Power List), couples are going to Africa, Asia, Europe, Mexico and the Caribbean. And "Greece is big this year." Horowitz said she was seeing the same number of couples as in the past and the same spend levels, but a greater emphasis on value. For example, she said, couples will look at a wider range of hotels and let free-night offers help determine the length of the honeymoon. Couples are "not being as extravagant as four or five years ago when we sold $20,000 Tahiti honeymoons right and left," said James Augerinos at Perfect Honeymoons & Holidays in Vienna, Va. Nowadays, he said, Costa Rica is "way hot," and Australia is the destination of choice for those with no financial or time constraints. Although honeymooners are spending less on average, said Heather O'Brien-Kroll, Platinum and Centurion counselor at American Express in New York, she still gets "a lot of inquiries for the exotic, such as the Maldives and Africa this year." On the other hand, destination weddings have "gone dead," Horowitz said. And O'Brien-Kroll, who previously handled "a few" each year, is now handling fewer. The issue, they both said, is that couples are now reluctant to impose travel costs on guests. However, for agencies specializing in destination weddings, the niche is far from dried up. Augerinos, whose title is honeymoon travel consultant and destination wedding coordinator, said his agency is experiencing only a "slight downturn." Sunset Travel & Cruises in Chicago, which specializes in destination nuptials, sees its overall travel sales volume down by 14%, said Jay McArthur, operations manager. But for the most part, he said, that reflects suppliers' discounted prices or client downgrading. The passenger count is up 3%, but the count is up 12% in the weddings operation, he said. Downgrading for weddings means choosing lower-cost hotels in the guests' interests or giving the deep Caribbean a pass due to price. Instead, McArthur said, his wedding business in Mexico is up this year. CruisesWhen asked to identify their top-selling product types in the first months of this year, a striking 82.4% of Vacation.com members cited cruises. Nothing else was even close. In the emailed survey to about 1,500 members, the 200 or so respondents were invited to name one or two top sellers. Tours did not fare so well, mentioned by only 15.1%. Honeymoons were higher at 21%, and family travel, including multigenerational, was mentioned by 17.6%. While agents sell cruises in all seasons and in all economic climates, the 2009 experience is a direct result of the lines' own "stimulus packages": huge price breaks and liberalized booking and cancellation restrictions for consumers and plans for agents that make it easier or more rewarding to book groups. Some agents add a little discount of their own. In other words, yields ain't what they used to be. But "the important thing is that people are going," said Jeff Sturman, general manager and co-owner of Best Cruises in Edison, N.J. "It is important that they just go." His agency is doing very well this year, he said, reporting that his February gross revenue was up 20%, based on 30% more passengers and producing increased profits of 9%. "So, we are working much harder, but at least the numbers are up." This follows a "very quiet" 2008 fourth quarter, he said. His business mix is different. "Luxury, never huge for us, is at a standstill," he said, and he reported a "huge softening" in popularly priced cruises that families have been buying. "They are younger and can wait a year," whereas, he said, multigenerational trips are "thriving." For seniors, he said, "time is running out. They have seen contemporaries wait to do something and then become unable to travel." Besides putting his midlevel clients on higher-end cruises, Cruise & Tour Center's Krieger said consumers who were showing up at his agency's periodic cruise events were "possibly the best prospects ever," because they "are buyers, not tire kickers, and they are better qualified." He surmises that today's buyers are figuring "they cannot wait until the economy comes back, or they will be on Medicare by then." On the other hand, he said, if consumers buy the trips, they will help the economy. For Gordon Group Professional Cruise Planners in Davie, Fla., things are moving more slowly. Jeffrey Gordon, president, said his call volume is "doing well," but closing is more difficult. By the time his clients call, he said, they have decided they want to take a trip, but "they are waiting to determine their own situation and waiting for deals. Everyone wants deals." America's Vacation Center in Vista, Calif. (No. 48 on the Power List), recently announced a sharp reduction in the cost of joining its network of independent contractors because the agency's lead-generation system is producing more leads than existing sellers can comfortably handle. Co-president Brad Anderson cautioned that while the fee was cut, standards for joining remain unchanged. Things haven't been great throughout the crisis. "The dip happened quickly," in October, Anderson said. "We had to fight to keep our bookings." But business improved each month after that, he said, adding, "We did a lot of planning for this year, believe me." He said the company had its best January and best February ever, "beyond our wildest dreams." Yields were down in early January but not since. In February, Anderson said, "in a surprise to me, ... the average transaction size and yields were up year over year." Moreover, he added in an early March interview that the third month "was off to a fabulous start." The company sells "high-value products ... not in the rebate mode" but rather at the suppliers' best prices, he said. America's Vacation Center, an Amex representative agency, has largely focused on cruises, but about a year ago it turned to escorted tours. That business "has grown exponentially," Anderson said, and the yields are high. "We were concerned, and we still are," Anderson admitted. Nevertheless, he said, based on 2009 bookings, "I'm tickled pink. That's a technical term." Making it happen Some business models seem better suited than others to surviving tough times. Larry Kopke, manager of Please Go Away Vacations in Great Bend, Kan., described his plans and sells about 30 "enhanced land and cruise/land tours." The agency commits to a selection of pre-existing tour operator and cruise programs but customizes its departures with add-ons, including a host to accompany the group throughout, insurance, air from the customer's hometown, extra sightseeing, meals and other features. Then, he said, the agency marks up the custom product to "significantly higher pricing levels" for a healthy return and aggressively markets its inclusive pricing. The agency also banks on a 37-year reputation and a 94% repeat factor. The result? Business at Please Go Away is up this year over last, and yields aren't much of an issue. For AAA of Southern California, going where the prospects are paid off handsomely at the Los Angeles Times Travel & Adventure Show, of which it was a sponsor. The agency said it expected combined bookings at the show and leads developed there to surpass the totals from the same event a year ago. Other agents sponsor their own shows, especially those who are cruise specialists. Best Cruises hosted three Alaska cruise shows in January, Sturman said, rather than its usual two. He also has increased the agency's budget for print and Web advertising. "We did not want a bunker mentality." Krieger said his agency was spending nearly as much on ads as it ever has, "and the upside is almost no one else is advertising. ... It is a big mistake to hunker down." Similarly, Berkeley said, "I believe in doubling up on marketing rather than going quiet." And America's Vacation Center said the bulk of its recently announced $1 million business stimulus plan would be devoted to advertising. However, 52.1% of the Vacation.com agencies polled by the group in March said they were spending less this year than last on advertising and marketing; 37.6% reported spending the same amount, and only 10.3% were spending more. When asked what they believed contributed most to their successes this year, 63.2% credited their well-prepared and highly motivated employees; 40.2% cited having a well-known specialty. Only 17.1% credited their successes to advertising and marketing in traditional media, and 13.7% credited Web marketing. Targeted direct mail and email marketing were more effective than other kinds of advertising, they said. Certainly, agents do have options aside from standard advertising, and even today, some people interviewed for this report said they were still relying only on referrals for new business. Many say referrals are their best source, even as they pursue new customers in other ways as well. Some are giving the Web more attention. Augerinos, while not cutting back on advertising, said he would start a blog. And Sparks, who said she had done very little marketing before December, is now using Facebook to promote adventure travel and wants to expand her Web presence and perhaps start a blog. McArthur said Sunset Travel & Cruises has increased its pay-per-click budget about 25% and has cut the budget for print media by 50%. All agents are attempting to step up contacts with existing clients. White at Wilton Travel Center said she encouraged her staff to call at least two clients a day. "Staying in touch is paramount, due to the economy," she said. At Cruise & Tour Center in Dallas, staffers are telephoning the agency's clients. "It is mind boggling what is happening," Krieger said. "We get three or four hits a day from this, from people we have not heard from." Gordon and his sales staff get personal, with handwritten, hand-addressed notes to top clients. Berkeley said his agency is also sending handwritten notes to clients. They are part of his try-it-all approach. "It is tickle, tickle, tickle all day long. You have to tickle the market. ... The key is the right combination of tickle, product and price." Ellen Bettridge, vice president for Amex's U.S. rep network, summed it up this way: "Agents are trying to truly hug their customers." For those clients with doubts about the wisdom of taking a specific type of trip or any trip, she said, "our job is to give people permission to travel."