Arnie WeissmannHow 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.

Traditional consortia know how counterproductive it is to have lots of small producers. Groups like Ensemble and have issued press releases saying that they've reduced membership, culling out less-productive agencies.

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.

Of course, suppliers will continue to be interested in organizations that can aggregate home agents, but only if it's easy and productive.

For example, 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.

But independent 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 attention.

But in the final analysis they were, alas, simply small potatoes.

To contact Editor-in-Chief Arnie Weissmann, send comments to [email protected].


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