The announcement that Virtuoso
made last month declaring that the travel agency network was
reinstating Classic Vacations as a preferred tour operator was a
classic and, in some regards, a virtuoso example of the fine art of
press release writing.
In addition to
stating the news at hand, it signaled to Virtuoso members that the
organization had not backed down from a once-contentious fight,
reassured other preferred suppliers they were not being usurped and
subtly declared victory in an ostensibly no-fault
Some background for
those new to the industry: Three-and-a-half years ago, Virtuoso
very publicly dropped Classic, a division of Expedia, from its
preferred roster, in part because IAC Chairman Barry Diller
declared in the pages of Travel Weekly that Expedia was a
competitor to traditional travel agents. Classic leadership,
clearly caught off guard, stated that its commitment to travel
agents had not faltered and countered that Virtuoso had a hidden
agenda to become a tour operator.
The reconciliation of
the two respected luxury brands in many ways reflects how the
travel industry and, in particular, travel agent attitudes and
ambitions have evolved since late 2003.
December of that year
might well have been the high-water mark for the channel wars waged
between traditional travel agents and their online rivals. Agent
frustration was palpable, and while there was not much they could
do about airline commission cuts, the post-9/11 falloff in travel,
SARS or the Iraq war, they could lash out at a competitive channel
that was luring away clients with Web-only fares and technological
advantages such as dynamic packaging.
Taking control of
inventory through merchant models and "wholetailing" seemed an
attractive new route. The additional step of becoming full-fledged
wholesale tour operators also seemed promising, especially for
high-end agent groups like Virtuoso and Signature, which also
dropped Classic during that period.
But times have
changed. The impact of SARS, 9/11 and Iraq receded; the growth of
the online channel flattened (as has the playing field for Web-only
fares); and the business climate improved on most fronts for
traditional travel agencies.
And, it turns out,
being a tour operator is a lot harder than it looks. Virtuoso and
Signature have backed away from their ambitions in that arena.
(Virtuoso has focused instead on pre- and post-tour
The culture at
Expedia has changed, as well. The arrogance of the past has been
replaced by measures of diplomacy and tact, both practiced artfully
by Classic's new president, Tim MacDonald.
Virtuoso even may
have concluded it could learn a thing or two from the online
channel: Its new executive vice president of sales and marketing,
Tony Gonchar, was hired from Expedia.
So when late last
year Classic's vice president of sales, Greg Bernd, crossed paths
with Virtuoso CEO Matthew Upchurch at Valerie Wilson Travel's 25th
anniversary party, the time was ripe for reunification
Virtuoso's rift with Classic occurred almost exactly one year
before its relationship with the card side of American Express
began to unravel. The troubles followed the AmEx announcement of a
card program that favored AmEx agencies over others; it seemed to
resolve after Virtuoso and other groups refused to cooperate, and
AmEx suspended the program. But rather than heal after Virtuoso's
apparent victory, the division widened, culminating in Virtuoso's
deal to provide services for a specially issued elite version of
years ultimately be enough time for AmEx, too, to reconcile with
In the end, an
essential component to bringing Classic back into the fold was
Virtuoso agents' continued attraction to Classic's products. It
would be a positive sign for AmEx if latent affection for its card
resides in Virtuoso agents' hearts, but AmEx will, in any case,
face a more formidable barrier than Classic faced in establishing a
relationship with Virtuoso in the future. Unlike preferred tour
operator relationships, when it comes to credit cards, polygamous
relationships are almost unheard of.