Charting a new course

A few years ago, when mainstream pundits were predicting that the Internet would destroy travel agents, one Omaha, Neb., man was not listening. When the airlines cut their pay to agencies, Steve Senft barely noticed. His agency was not affected: The Cruise Co. specialized in cruises only.

Senft, who started his agency in 1988, approached the industry without the common preconceptions of how the industry operated. The industry was heading into uncertain times, and conventional wisdom was no longer reliable.

Raised in Los Angeles, Senft had a gift for sales. After college, he took a position with Johnson & Johnson selling baby products to retail stores in the Los Angeles area. Pleased with his productivity, the company moved him to the San Francisco area, then to Fort Wayne, Ind., and on to Omaha, where he and his wife started a family in the late 1970s.

"In 1978, Johnson & Johnson offered me the position of district manager in Chicago," said Senft. "But I felt that I had become a corporate nomad, and I didn't want to do that anymore."

Senft turned down the offer. He stayed in Omaha and applied his talents to selling residential real estate.

His successful efforts in the real estate business led to the opening of his own real estate agency in 1986. Then in 1988, he decided to try something that was generally seen as crazy, a cruise-only travel agency.

"Back when I first came up with the concept, people said, 'You can't make it selling cruises,' " Senft said. What could be more obvious?

But he had other ideas. People in land-locked Nebraska might really like cruising if they knew about it.

The new agency began as a separate office in the same building as the real estate agency. It was on a main street with plenty of traffic, but most business came from promoting the services in the newspaper. Carnival, in particular, was very supportive.

"We started with one person," said Senft, "but we quickly evolved because of the quality of service we were providing. From the beginning, we were doing well."

In 1994, the agency was named Carnival's top agency of the year. "Every year since we've been a top account with Carnival, Royal Caribbean and Princess," he added.

With a successful business established,

Senft tested the waters for the product agencies traditionally considered their staple: airline tickets.

"We made an effort to accommodate requests from customers for air," he said, "but we came to the conclusion it was a losing proposition."

Senft joined Giants in 1997, soon after the agency cooperative introduced its Giants Select database marketing program. In 1999, as one of Giants' top producers, Senft was asked to join its board.

Today the agency employs a staff of 10 and does $6 million in cruise sales a year. And it still does not bother with airline tickets.

"There's more opportunity in the cruise business than ever before," said Senft. "We're going to stay focused on cruises. If someone asks for a hotel room and an airline ticket, we tell them to go on the Internet."

Now there's a switch.

-- David Cogswell

A nontraditional model

Steve Senft got the idea for a cruise-only agency when he and his wife went on a cruise in 1985. They enjoyed it so much, they took another one the next year.

"It became apparent that there weren't many people who had a real strong ability to sell cruises," said Senft. "We had walked into a travel agency and [the staff] just gave us a brochure. There wasn't anybody who could talk intelligently about the experience."

His entrepreneurial instincts were aroused. "I became very interested in the industry," he said.

Senft did some research and discovered that the cruise industry was about to embark on a major expansion of capacity.

"I felt that with that type of expansion and billions of dollars of investment going into new ship builds, there would be a need for a strong sales distribution system," he said.

Senft saw an opportunity to be a strong link in that system. He flew out to a cruise show in Anaheim. "I had the opportunity to meet with some of the cruise lines and found them to be very receptive to my idea of developing a strong, sales-oriented agency focused exclusively on cruises," he said.

He had a hunch that the cruise lines would need someone who knew how to sell. "It was apparent to me that there wasn't a strong proactive sales distribution in place," he said.

Pure profits

Do you book tours and cruises on your CRS or through the Internet? If you do, congratulations, because you are ahead of the game.

You are making more money and saving time. Most tour companies offer higher commissions for CRS bookings.

Although the cruise lines do not offer a standard higher commission, many offer bonus commissions at various times of the year or for specific sailings.

How does this affect your bottom line? If your net profit is 2%, and you make an additional 1% commission, you are making 50% more profit.

If you make $250 in commission on a cruise and your net profit is $50, a bonus commission of $50 has just increased your net profit by 100%.

These are not insignificant numbers, especially when you total them at the end of the year.

If only 25% of all the tours and cruises you book are available electronically, just think of the extra pure profit your business could see at the end of the year.

There are other reasons, less obvious but equally important, why you should book electronically.

All businesses are looking for ways to decrease expenses and increase profits. For now, suppliers are offering increased commissions or bonuses for electronic bookings because it saves them money.

Some suppliers are paying less or no commissions for phone bookings in low-profit markets such as Las Vegas or fly-drive packages. They are spending millions of dollars developing these systems and there is no going back.

At some point, there will be no or very reduced commissions for phone bookings on mass-market products.

The writing is on the wall. Learn how to use automation now and take advantage of the extra money.

Or wait until there is no choice except to take a crash course in automation, make less money or close your business.

Lucy Hirleman, CTC, MCC, owns Berkshire Travel in Newfoundland, N.J.
E-mail her at [email protected]; fax (973) 208-1204.