Bob Sweeney, president of Innovative Travel Acquisitions, has been playing matchmaker between travel agency buyers and sellers for 22 years. Retail editor Kate Rice talked to Sweeney about the changes he's seen in the industry since he left Wall Street to start the brokerage.
Q: How did you get into the business of buying and selling travel agencies?
A: One of my Wall Street clients owned a general brokerage firm. I worked for them for a very short period of time. They handled every kind of business you can imagine: liquor stores, dry cleaners. A travel agency decided to list their business with them, and I was the broker. I was amazed when I picked up the phone and called a couple of obvious prospects. When I asked, "Would you be interested?" I got "Yes and yes and yes!" There were buyers out there. Rather than generalize, I decided to specialize.
Q: How were agency sales being handled at that point?
A: There was no formal way for agency buyers and sellers to come together. It was all airline reps whispering back at headquarters, "Sally says she's getting tired of it." There was no confidentiality. I saw a niche and jumped in there.
Q: What's the market like today?
A: Everyone is looking to buy corporate agencies. There are a lot of buyers but not many sellers. Everyone is fishing in the same pond.
Q: What about leisure agencies?
A: There are plenty of leisure agency buyers. A lot of people are getting pink slips in corporate America. They want their own company, and travel is attractive. These corporate road warriors have had enough, maybe they've done a lot of traveling, and they think it's a sexy business. Which it is, but they don't know how tough it is and how tight the margins can be.
Q: What's changed in 22 years?
A: In the early '90s, we did a lot more closings, because there were a lot more agencies, 30,000. That was when airlines were paying 10% commission and the spouse of every doctor and lawyer bought agencies. There were a lot of hobbyists out there. Now they are serious students of the industry. They have to be in it for real, not just for jollies. It's become a much more professional business in the last five or 10 years.
Q: What were the best years and what were the worst?
A: The good years were when Navigant was buying agencies like Chiclets. BCD and US Travel did the same. Those were the three rollups. And there has been a movement across the country for the past 25 years of major buyers doing multiple transactions. The bad years were 2009 and 2010. It was like a desert trying to sell a travel company in the depths of the darkest recession.
Q: What's the size of the agency market now?
A: There are about 11,000. Those are not official ARC numbers; that's the number we zoom in on. There were more transactions [in the 1990s], but they were lower-priced. The average agency used to be around $1.5 million. Now it's around [$4 million].
Q: Has your model changed?
A: Originally we did all retail travel agencies. Now we do incentive companies, meeting companies, motorcoach tour companies, destination management companies. We do specialty tour operators: culinary, golf, ski, single destination.
Q: What's the outlook for your business?
A: We're facing a brain drain as the best agents leave the industry to retire. Travel needs to be on the checklist for high school students as a career.
Follow Kate Rice on Twitter @krtravelweekly.