It became clear to a lot of travel
agents at some point in the last decade or so that to survive in
the future, they must specialize. The disappearance of airline
commissions and the emergence of the Internet made the phrase
"full-service travel" sound quaint and increasingly curious, and
consumers began to show a preference for agents who brought
in-depth knowledge to the table.
The problem with
specializing is that it becomes difficult to build appreciable
scale. For most agents, the decision to specialize was also a
decision to downsize. Owners of many agencies that were in the $2
million-to-$5 million (gross bookings) range are now profitable at
$500,000 or less, with fewer or no employees.
While that was
occurring at one end of the scale, megaretailers, dominated by
corporate travel and Internet agencies, were getting bigger -- and
fewer. Every year for the past five years, our annual spring Power
List, which profiles travel agencies that have gross revenue over
$100 million, has gotten shorter. It's not that less travel is
being sold; it's just that whenever a mega-agency buys or merges
with another, we lose a listing.
I was delighted to
be notified recently that a new entry will be on the list next
year. A little over four years ago, I wrote a column titled "The
Death of Full-Service Travel." It reported how the children of the
owners of a San Diego-area agency, Full Service Travel, hoped to
turn around a dying agency.
Two brothers, Brad
and Van Anderson, realized that "full service," once the engine and
pride of the shop, was pulling it down. Like many agents in 2002,
they were dealing with the aftershocks of 9/11 and mounting
pressure from online agencies. They were scared that their
eight-branch, $40 million business, renamed Anderson Travel and
Cruises, would go broke.They did not want to downsize. They wanted
to grow. But they had to come up with a model that would allow for
specialization and growth.
which was still a work in progress at the time of my first column,
was to build proprietary software that would enable their agents to
make bookings, track vendor sales in real time, monitor vendor
promotions and exploit customer preferences to increase
productivity and profitability. (This brief description of their
Agent Power software is woefully inadequate. It is truly a wonder
of organization and efficiency.)
They became a host
agency, taking bookings from 200 agents, each a niche specialist.
They again changed the name: It is now America's Vacation Center.
When consumers call or e-mail AVC, they are routed directly to the
agent whose specialty is linked to the client's
They have rolled
out some other innovative programs, luring a university
communications professor to become their full-time sales trainer
and working with suppliers, destinations and the Travel Institute
to create specialist courses just for their agents.
And although they
have achieved considerable scale -- they expect close to $200
million in sales in 2007 -- they won't rebate. "There are so many
promotions out there at any given time that you don't have to
rebate," Brad Anderson said. "Group amenities, regional specials,
passenger offers, bonus commissions; our system tracks them all.
Rebating comes from frustration about not being able to close a
sale. But we feel we have plenty of arrows in our
achievements are encouraging, not least of all because their
success is built on technology and the efforts of experienced
agents, a winning combination for a firm whose goals were
specialization and growth.
Here's what Brad
Anderson said in my column four years ago: "(The travel agency
business) doesn't have to be a bad business. It's just different
than it used to be. And there's tremendous opportunity for people
who are willing to act differently."
The phrase "It's
different than it used to be" applies as much today as it did then,
as does the potential for "tremendous opportunity." I'll be
interested to check in on the Andersons in another four years to
see how their model has further evolved. And to see, four years
hence, what new types of agencies have been developed by other
"people who are willing to act differently."