How can I put this
delicately, so delicately that it won't burst a growing, and
therefore increasingly fragile, bubble? I'm not sure I can, so I'll
be blunt: Supplier fascination with reaching out to independent
home agents won't last. It isn't practical. The attention being
paid to them is disproportionate to their importance.
It's a bubble, and
it has parallels with the now-burst tech bubble of the '90s.
Despite all that had been learned about how to value businesses
over hundreds of years, small companies with no balance sheet
integrity were assigned huge value. Pundits reported that a "new
economy" had arisen that didn't play by the rules of the old
economy. And a lot of people who knew better suspended their
knowledge about how businesses work and bought into it.
I have gone to
trade shows where suppliers rave about the number of home agents
walking the aisles. I have also spoken to many of those home-agent
attendees, and most fit the profile that suppliers have long said
they eschew - they're hobbyists, hoping to get some travel deals
and, perhaps, make a little money on the side.
Please note that
when I refer to a bubble, I'm talking about supplier interest, not
the phenomenon of home agents. They're here to stay, and their
ranks likely will grow. But as the ranks grow, the average sales
per agent will go down, and umbrella organizations and marketing
vehicles for home agents will come under pressure.
consortia know how counterproductive it is to have lots of small
producers. Groups like Ensemble and Vacation.com have issued press
releases saying that they've reduced membership, culling out
And, taken as a
group, home agents are very low producers. According to the most
recent data supplied by the National Association of Commissioned
Travel Agents, 25.1% of home agents produce gross sales below
$25,000 per year, and 56.2% are under $100,000.
Even the most
productive home agents are, by industry metrics, small. Only 1.4%
produce more than $3 million a year. Since the average travel
agency now has gross sales of $4.9 million per year, suppliers may
soon wonder how much they're willing to invest in chasing schools
of goldfish when there are still pods of whales.
suppliers will continue to be interested in organizations that can
aggregate home agents, but only if it's easy and
mega-host Global Travel International of Maitland, Fla., claims
gross sales in excess of $100 million from its network of home
agents and provides suppliers with just one contact to reach a
large group of small players.
home agents? Interest in them won't last. It's akin to some of the
designer vegetables now being produced. My grocer recently loaded a
bin with blue, gold, rose and brown potatoes labeled "The Easter
Egg Collection." They were attractive, and expensive, and drew
But in the final
analysis they were, alas, simply small potatoes.
Editor-in-Chief Arnie Weissmann, send comments to [email protected].