Corporate business thrives at Horne Travel

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Whatever happened to the Michigan agent whose fee structure for air tickets was 10% of the ticket price?

The short answer: His business, Horne Travel Consulting in Canton, Mich., is thriving, and that service fee is now 12%.

Charging what is effectively a commission might sound a little brash, but the agency founder and owner, Chris Horne, was only 31 when he went to 10% in August 2001.

Apparently, young and brash works. Horne said his agency, now at $25 million, grows steadily each year, but not too fast -- just the way he wants it. In 2003, when Horne described his business to Travel Weekly ("Legal-eagle sees agency take flight," March 3, 2003), it was at $18 million. He was CEO then; he is now chairman, and Christie Mosher is president and CEO.

 

In 2003, Horne said he would cap his business at $50 million, but now he amends that to "possibly" $100 million. The issue is maintaining the personal service that allows Horne Travel to implement its fee structure, he said.

The 12% fee covers hotel and car components. If a client books hotel or car only, there is a flat fee. Flat fees also apply to refunds and exchanges.

When Horne pitches service, he tells prospects his won't be the cheapest offer they'll see, but he uses a hotel analogy: If you want Ritz-Carlton service, you don't book a Red Roof. You pay more to get more.

Service is key to winning and keeping clients, but there is more: The agency handpicks its prospects. Horne said the agency looks for companies that "are at the top of their game. They see service as a benefit they are willing to pay for."

Horne's clients are scattered around the globe (Dusseldorf, London, Milan, Munich, Paris, Shanghai and Tokyo as well as Chicago, Dallas, Los Angeles, New York and San Francisco).

His average client spends about $3 million per year on travel, the size at which companies no longer want to handle all their own travel purchasing and a size at which a full-service agency is a good fit, Horne said. Having numerous small customers also means the defection of one cannot hurt the business much.

Horne said the agency negotiates all the supplier deals for each client and, if the client wishes, creates custom software so the client's data can be dropped into its accounting system, avoiding the need for reconciliation.

Services also include online booking, but travelers rarely use it, Horne said, because they would rather talk to his staff. He said he has "a great staff, which didn't happen overnight."

So how does Horne find and keep his agents? He finds most via referrals from existing staff, though he successfully trained a couple of career changers with strong business backgrounds. Horne said he attracts and keeps staff because of:

  • Excellent benefits. He provides medical, dental, eye and life insurance coverage at no cost to staff plus 401K matches of 3% regardless of staff contributions.

  • High salaries. "Some are at six figures. In fact, quite a few are," he said.

  • Steady business growth, which means staffers see their own prospects improving.

  • A full-time personal trainer on staff. The trainer, also a nutritionist, helps in relieving stress, Horne said.

  • An attractive and accommodating setup: marble floors, cherry wood furniture, private offices for everyone, two kitchen areas and a workout room. (When the agency relocates to larger offices in Livonia this spring, the workout space will include showers and lockers, Horne said.)
  • The single-location Horne Travel, founded in 1996, now employs 22, and 96% of the business is corporate. To grow leisure sales, the agency launched HTC Vacations a year ago, headed by Lisa Prince, director.

    For leisure, the air ticket fee is 10%, capped at $50, except for existing corporate customers, whose fee is capped at $35.

    Also, to accelerate HTC's growth, the agency launched a hosting program.

    Horne is a little miffed at a general perception there is no future in the travel agency business.

    He is "seriously considering" starting a travel school to show there is opportunity, and because there are so few around nowadays.

    Think you're a good candidate for an upcoming Agent Life? Contact Nadine Godwin, Agent Life editor, at [email protected], and please include your agency name, agency location, telephone number and e-mail address in the message and put "Agent Life" in the subject line.

    Marc My Words

    The flexible, profitable independent tour

    By Marc Mancini

    One of the most frequently sold travel products is the independent tour. It's by far the most popular form of packaged travel -- some estimate that 90% of all multiday tours sold are independent.

    Yet there's little information out there on how to properly sell them. It's as if we're supposed to just know how.

    First, a few definitions. An independent tour is a package with elements that permit buyers to travel on their own. There's no tour manager involved, no group to travel with. Clients are free to do what they want within the package structure.

    One variation is the fly-drive, with only two product components. Another is the increasingly popular hosted tour, which provides on-site representatives of the tour operator, usually at a hotel lobby desk during set hours, to assist and counsel clients.

    Another version: the dynamic packages that online agencies produce, where the computer assembles a cluster of travel components that the customer has selected.

    How do independent tours benefit you?

  • They yield solid commissions.
  • They enable you to access a huge inventory of products, often at competitive rates.
  • They present many opportunities to up-sell and cross-sell (special excursions, a higher class of car rental, etc.).
  • They provide a place to one-stop shop for the components clients need.
  • They're often the best source of last-minute, well-priced products.
  • They appeal to an array of customers.
  • How do independent tours benefit clients?

  • They provide considerable flexibility. Want to visit that little Austrian village in the distance? No problem. Stop, go, linger, anywhere, anytime, with no schedules to follow.
  • Independent tours represent an outstanding value. The tour operator's size and leverage generates great prices. According to many experts, an independent package typically saves clients 20% to 30% over a trip assembled piece by piece. It's not unusual for a hotel-car-air package to cost less than the air alone.
  • They offer a wide selection of properties. Be alert to a common consumer misconception: that independent tour operators offer only bargain-level lodging. That once was true. Today, some of the world's finest hotels can be found in a tour operator's portfolio.
  • Independent tours include only the components that people want.
  • Who are prospects for an independent tour? They tend to be somewhat adventurous, and they like being in control. They often prefer to see a place by car.

    And they're traveling to places where an escorted tour doesn't make sense to most people. Most tropical beach resorts qualify and, not surprisingly, such destinations dominate the independent tour market.

    Marc Mancini is an industry speaker and consultant who teaches at West Los Angeles College.

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