Well into the 1990s, 50% of
ARC-appointed travel agencies had gross bookings of less than $3
million (and the majority of those were under $2 million). These
brick-and-mortar agencies were for the most part generalists,
positioned to handle the needs of any traveler walking through the
That reality shaped the
strategy and message of a lot of agency groups back then. A
consortium or co-op may have comprised little guys, but if the
membership was large enough, gross numbers would convert to muscle
when negotiating with suppliers. Quality helped, but quantity would
Having groups of
aggregated, smaller players worked for suppliers, too. Before
e-mail, the return on investment for reaching out to smaller
agencies wasn't impressive, but the larger an assembled group was,
the more efficient an effort targeting them would be.
This model hummed along
right up until things were taken to their logical extreme, when
large sums were spent rolling up the smaller and regional consortia
into larger consortia. But no sooner was this accomplished than the
tide shifted, and suppliers, now enabled by technology to reach
smaller players inexpensively on their own, demanded a lot more
quality and loyalty from a group. And size mattered
There were other
pressures on agency groups. Virtuoso upped the ante for everyone in
several ways, not least of which by showing what agencies with
sophisticated databases (and wealthy clients) could do.
agency groups replaced the press releases that had announced
sign-ups of new members with announcements of plans to cut deadwood
from their ranks. Some groups also aggressively challenged
Virtuoso's dominance in the luxury space.
For the most part,
agency groups succeeded in downsizing while raising their quality
and sharpening their demographic focus in every conceivable way,
just in time for another shift in supplier attitudes -- perhaps not
in articulated attitudes, but certainly in behavior.
agents with a focus on quality clients are still the Holy Grail,
the stock for small, unsophisticated, generalist agents has risen
among suppliers. Generally speaking, suppliers believe that they do
better by being inclusive of all. In parallel, agents are
understanding that they, for the most part, can't be as choosy as
they want to be about their clientele.
It has now been two
months since Royal Caribbean Cruises Ltd. cut ties with groups it
labeled "card mills." No matter what you think of that move, these
groups consist of members who are arguably the lowest-producing
agents on Earth (not in aggregate, but individually).
RCCL scored points with
traditional agencies by taking this stance. So did Steve Perillo,
who cut ties with one of the groups, YTB, even though he didn't
have a formal arrangement with them. But two months have passed,
and no other supplier has publicly taken advantage of an
opportunity for publicity and the support it might gain among
agents who actively oppose these groups.
When I talk to
suppliers about this, they speak almost as one: "Why should I shun
them? These agents may be low producers, but in total, I'm getting
some business, and they may produce more down the road."
Another sea change:
Groups that have put a lot of effort into presenting themselves as
major, upscale players find that they can't be pure in their
positioning. At the recent Signature conference, much was made of
the consortium's preferred-supplier arrangement with seven brands
within The Travel Corporation portfolio. Some, like Red Carnation
Hotels, certainly seem a good fit for Signature's luxury posture.
But others, like Trafalgar Tours, are aimed squarely at the mass
I asked a TravCorp
brand president why he thought Signature included mass-market
brands with the upscale ones.
"The reality is that
there are Signature agencies that have some mass-market clients,"
he said. "If they have to go outside their preferred vendors to
book them, it doesn't help Signature, and the agency won't get the
override. But it's not just Signature. There's an aspirational
component in all the luxury agency groups. It's just a reflection
All of this has a
vaguely back-to-the-future feel to it. Technology has made small
outfits players again. And as more agencies compete for pieces of
the luxury pie, the slices are getting a bit thinner for
A high-producing agent
with wealthy clients will always be king of the hill. But it turns
out that suppliers and agents alike are coming to the conclusion
that the hill can get higher for all when the base is broad and