have a friend who, to the marrow in his bones, is both a retailer and an optimist. After working as a retail analyst at Goldman Sachs and as a buyer for a major department-store group, he started a chain of retail bookstores. Five years later, he sold them for $42 million.
Fresh from the bookstore success and overflowing with confidence, the next field he set out to conquer was travel. If Petsmart could make stacks of dry dog food look sexy, he reasoned, certainly the romance of travel could be captured in a superstore retail environment.
To make a long story short, he was wrong. Rather than conquering travel, travel conquered him. He struggled for three years trying to run agencies in retail-store environments before calling it quits.
I thought about him during a recent conversation with Charlie Liekweg, CEO of AAA Washington Inland, which includes all of Washington state and northern Idaho. Like my other friend, Charlie, too, came to travel from a successful career in another field, and tried to bring his experience to bear. He had spent a number of years in the tech sector and venture banking, and had risen to the presidency of GTE (now Verizon) Northwest and Southern California.
As it turns out, the dog-eat-dog world of technology startups and telecommunications prepared him well for retail travel. Upon his arrival at the job six years ago, he found a culture of "some complacency" and introduced "competitive paranoia."
"Yes, AAA's a nice place and everyone loves us," he said, "but there are people out there trying to cut our throats."
With a fresh eye, Liekweg deconstructed the travel side of AAA to its most basic elements. Despite the retail label, he saw the business as a distributorship making arrangements with suppliers. "And for the most part, what those arrangements are will determine success," he said.
His competitive paranoia cut in every direction. He worried that, in the future, more suppliers will reduce or eliminate commissions. He kept a wary eye on the online channel and prepared technology that he hopes will keep him competitive. "It's a tough business to make money at," he said, "and I sometimes think it's better to be on the other side of it."
By "the other side of it," he's referring to wholesaling. Like AAA Southern California, which bought Pleasant Holidays, he wouldn't abandon the retail side but rather would add a wholesale component. Noting that he could not do a large acquisition on his own, he'd consider partnering with another AAA, or "perhaps we could find a small niche, preferably in the Northwest," where it would be possible to go it alone. Still, he says ruefully, "even that business is not without its trials and tribulations."
Liekweg stressed that he has "nothing planned," but is only thinking about it. "It's frustrating being solely a distributor in this business. It is not the most profitable in the world."
After our conversation, it occurred to me that the experiences of Liekweg and my other friend could perhaps be distilled to two lessons for sellers of travel today. First: Don't think of yourself as a retailer. Second: Be paranoid.