Hawaii agency spins Asian crisis to its advantage

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HONOLULU -- Regal Travel, Hawaii's largest agency, viewed the state's decline in Asian visitors as an opportunity. "It hit me last March: There were empty seats. Carriers were hurting and were ready to wheel and deal for the first time," said Herb Dockery, Regal president.

The result was six escorted shopping tours to Bangkok between September to year's end for Hawaii residents. All sold out, each with 30 people. Monthly tours are scheduled this year, starting at $799, with air on China Airlines and six nights' hotel accommodation.

Ironically, the 10% decline in Hawaii's Asian visitors last year helped Regal post a record gross sales figure. The Bangkok tours were the latest move by the $40 million agency to increase revenue since the first commission caps in February 1995.

"We in Hawaii probably took [the caps] on the chin more than anybody. Regal lost a lot of money," he said.

The first caps also affected Regal's growth; the company had just opened in Kona and was about to open at Honolulu's Ala Moana Center. "We held off," said Dockery. The agency has not opened another location since then.

The recent international caps, he said, had less than one-tenth of the affect on the company than did the earlier caps and cuts.

Regal does little international business-travel ticketing. Most of its 13 offices on four islands are at shopping centers, and more than 80% of its business is leisure travel.

With the first caps, Regal searched for ways to make up for lost revenue, including tightening up on credit. "We sold few cruises, so we began to push these products and then created our own cruise packages," he said.

Last year, it had 15 escorted-tour cruises; this year it will have 20. Seven-day Alaska cruises are the most popular, followed by cruises through the Panama Canal and Mexico. "Many, especially retirees, would like to go on a cruise but [they] are only comfortable going with a group."

The cruise tours served as a model for the Bangkok tours. Both are sold only by Regal and not through other agents.

Dockery said the major selling points are the presence of an escort, who travels with the group, and the fact that the tour is almost guaranteed to operate. Tours get under way with a minimum of four passengers (the lowest number they have had on a cruise was 10). Regal also has an advertising budget smaller agencies could not afford.

With the first caps, it began negotiating net rates with island hotels for resident interisland travel. It is also moving more into bulk air fares.

The agency is part of a large Honolulu-based company: International Management & Services Group, owned by Ray Miyashiro. Sister operations include Trans Hawaiian Services, one of state's largest tour bus companies, and Rendezvous Tours, which specializes in interisland and Nevada packages for residents. Regal's 50,000-member Travel Club also helps.

Dockery joined Regal seven years ago to start the club, becoming president three years ago. The cost for joining the club is $87 a year. Members get a free Aloha Airlines roundtrip ticket at a little lower price than Regal normally would sell it for, and a newsletter four times a year.

"[The club] gives us a big database," said Dockery. "Our goal is to make them permanent customers. We give them [better] deals and promote them in the newsletters before we advertise them. He said Regal is approached by an average of one agency a month that wants to sell.

In late 1997, Regal instituted a ticketing fee of $10 per ticket (excluding interisland flights). Dockery knows of no other Hawaii agency that does this, although some have various service fees. Dockery said, "We decided [there would be] no exceptions. Our 85 agents just quote the price and the fee and do not discuss it unless asked questioned."

Not quite paradise

You've got to be a different breed to survive in paradise, according to Dockery. Mainland agents might want to consider the following issues before setting up shop in Hawaii:

  • The state's top product, Dockery noted, is interisland travel, which results in a large volume of ticket sales, but profit is low and business is competitive. Said Dockery, "Hawaii agencies do thousands of small transactions each week to develop the dollar volume that many mainland agencies can achieve with a few transactions."
  • Hawaii is the only state where airline ticket coupons are sold through bank automated teller machines. Hawaiian Airlines started selling interisland coupons (which are used as tickets) through Bank of Hawaii's ATMs last spring. Regal filed suit with the state Department of Commerce and Consumer Affairs, contending that the bank, which is not registered as a travel agency under state law, is acting illegally. Regal is awaiting a ruling. "We wish that other agencies had joined us in this fight. If this scheme is upheld, sooner or later mainland agencies are going to have to fight this same battle," Dockery said.
  • Hawaii is the only state that imposes a tax, 4%, on airline commissions
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