TW illustration by Jenn Martins
TW illustration by Jenn Martins
TW illustration by Jenn Martins
TW illustration by Jenn Martins
The combination of agency downsizing and evolving host-consortia relationships has advisors and agencies looking anew at the hosting proposition.
By Jamie Biesiada
March 29, 2021
After the coronavirus pandemic was declared in March 2020, Vickie Everhart began scrutinizing her business, Krouse Travel, in York, Pa. She used time that would typically have been spent booking travel to instead comb through every expense, every preferred supplier arrangement and negotiated agreement.
“When Covid hit, it gave everybody in our industry a chance to really look at things in much more detail than we had before — we were always so busy,” Everhart said. “You got a bill, you paid it. You had good relationships, you continued those relationships. But when Covid hit, we got back in the driver’s seat. I spent an awful lot of time looking at what we did as normal routine — why we did it, and whether it was it still the best way to go.”
‘Covid gave everybody in our industry a chance to really look at things in much more detail.’
During one webinar she sat in on, another agency owner mentioned the benefit of joining a host agency. Agencies that weren’t hosted, she recalled him saying, were leaving money on the table.
It resonated with Everhart, and she began to research the world of host agencies. Ultimately, her agency became affiliated with Travel Planners International (TPI) in Maitland, Fla.
“I didn’t want to leave money on the table,” she said. “We work hard.”
A pandemic trend
Everhart’s story is becoming more and more common. In addition to welcoming new-to-the-industry advisors throughout the pandemic, host agencies have reported an uptick in onboarding established agencies.
The agents attracted by hosts are, in some cases, giving up their own accreditations. Some are leaving behind brick-and-mortar offices and going home-based.
Or, experienced staff agents taking over an agency’s book of business after the owners retire or simply quit are drawn by the support a host agency offers.
Whatever the circumstances, they are joining what was already a rapidly growing segment of the industry and becoming independent contractors (ICs). In many cases, those going this route are agency owners who, though morphing into ICs themselves, also play host to their entire sales force — staff and ICs — to become hosts-within-hosts.
Jenn Lee, vice president of sales and marketing at TPI, said this is something she had been talking about long before the pandemic struck.
“I don’t understand — why are these agencies that do less than $2 million a year with consortia?” she asked. “They’re losing out so much. We’re starting to see people finally listening and saying, ‘Yeah, maybe I should be with a host that’s with a consortium, because I make more money, I save more money and I have more support through all of this.’”
Everhart is somewhat unusual in that she plans to maintain her affiliation with the Ensemble Travel Group consortium but also tap her relationship with TPI. For instance, she is working with TPI on a new website for Krouse Travel. She views the TPI affiliation as additional clout.
Others, reflecting Lee’s viewpoint, are looking at the relationships between hosts and the consortia afresh, recognizing advantages to staying with a consortium, but through a host agency relationship rather than direct membership.
Terri Berger-Davis is the owner of Berger Travel Agency in Mansfield, Ohio. She is in the process of shedding her membership in Travel Leaders Network (TLN) as well as her ARC and IATA affiliations after recently joining KHM Travel Group in Brunswick, Ohio. KHM is also a TLN member.
Berger-Davis has been a travel advisor for 47 years, and she has been thinking about semi-retiring, cherry-picking which clients she wants to serve going forward. The pandemic presented her with that opportunity.
She is shutting down her brick-and-mortar agency and hopes to sell the building, and her employees have become ICs with KHM, as well. She was previously in business with her sister, who found other employment late last year.
Now, Berger-Davis is looking forward to focusing more on specific suppliers, something she previously felt she couldn’t do in a brick-and-mortar agency with walk-in clients. She is also looking forward to taking advantage of KHM’s perks as well as TLN’s.
“All pieces of the puzzle came together the way they should,” she said.
A host of benefits
Some view giving up a brick-and-mortar location as downsizing, but KHM is pushing back against that perception, said Geoff Cox, vice president of sales for the host agency.
“They look at it like they’re going backward,” Cox said. “They just don’t fully understand what a host agency brings to the table.”
Hosts seem to suffer from some negative stigma, Cox said. Some view them as the enemy or believe they’re not real agencies. But, in fact, hosts are designed to help agencies grow in size and scope, he said.
“We can train a person right off the street and bring them up to speed quickly, and they can be a full-time agent for you,” he said.
‘We can train a person right off the street, and they can be a full-time agent for you.’
Cox posited that every agency should be looking to expand. Affiliating under a host agency offers access to an entire training department, among other benefits. And, suppliers are ready to spend marketing dollars with hosts as the industry begins to recover from the pandemic.
“We’re bringing fishermen to the stream to catch the fish,” Cox said.
Suppliers are noticing, too, he added.
Jackie Friedman, president of the host Nexion Travel Group, said suppliers are interested in spending money with hosts because they believe the segment is growing. Hosts, she said, give agency owners the opportunity to run their business with a very low cost structure. During a period when cash flow is “so critical,” hosts become that much more attractive.
Will they stay or will they go?
While the pandemic spurred established agencies to affiliate with hosts, the question remains: Will they keep those affiliations when things improve or return to storefront locations, rejoin consortia and reestablish their ARC accreditations?
Stephanie Lee, founder of HostAgencyReviews.com, said she has been “astounded” by the number of established agencies that have signed on with hosts. Many larger agencies have been offered lucrative deals by hosts, and they are, for the first time, benefitting from the assistance that a host agency offers in areas like marketing, training, commission collection and more.
“I’m just curious to see what the larger agencies will end up doing once they reach prepandemic sales levels,” she said.
“I have a feeling a lot of them will have gotten a taste for what it’s like to have all that help, and with the attractive agreements host agencies have come up with, may not go back to their own accreditation.”
‘I have a feeling a lot of larger agencies may not go back to their own accreditation.’
KHM’s Cox said he believes the help offered by hosts will be enough to sway the agencies to stay.
“They’ve never had the experience of being able to have access to the support we offer, the commissions we offer, the training we offer,” he said.
Kathryn Mazza-Burney, chief sales officer at Travelsavers, has seen some Travelsavers agencies shift to parent company American Marketing Group’s home-based brand, the Network of Entrepreneurs Selling Travel.
What the agencies do down the road depends on the individual agency, she believes. Some have indicated they want the situation to be temporary. Others, not.
‘Some who have left storefronts have been doing exceedingly well.’
“Some who have left their storefronts and have gone home have been doing exceedingly well, realizing they don’t need the overhead, realizing that they can absolutely operate their business from anywhere in the world,” Mazza-Burney said. “If Covid has taught us anything, it’s that. And they plan on staying home-based.”
What about consortia?
Although established agencies are increasingly affiliating with hosts, many observers believe the ultimate effect on the consortia will be positive, especially if the consortium caters to host agencies by providing services down to the IC level.
Friedman recalled a time when consortia were more reluctant to work with host agencies. That has shifted in recent years as the model has become more respected in the industry, she said. They have also recognized the value that hosts bring.
“Consortia aren’t as good working with agents who do $200,000 [in sales], $100,000, less than $100,000,” Friedman said. “It’s more efficient to get the business through one of their host agencies versus supporting that agent directly.”
‘Consortia aren’t as good working with agents who do $200,000, $100,000, less than $100,000.’
Advisors benefit from affiliation with a host in other ways, as well, she said. While an advisor whose annual sales hovers around $300,000, for example, might be a small fish in a big pond at a consortium, that might be an above-average producer with a host.
The hosts also expand the number of working travel agents, Friedman said.
“Hosts can focus on bringing in new people because host agencies are structured to do that, much more so than consortia,” Friedman said.
TLN is among the consortia that have adapted their offerings and attracted large hosts, said Lindsay Pearlman, senior vice president of international leisure. ICs affiliated with TLN hosts can self-select their marketing or technology needs.
‘We’ve thought about how to create a self-select environment that meets specific needs.’
“We’ve thought about how to take marketing, technology, supplier relations — all those elements that make up a consortia — and create a self-select environment that meets specific needs of members, whether they’re a host or somebody keeping their brick-and-mortar business,” Pearlman said. “The options vary very significantly.”
In the past five to seven years, Stephanie Lee has noticed several consortia tailoring their programs to attract host agencies. The most successful consortia will likely be those that are host- and IC-friendly, she said.
‘The consortium that nails the host agency model is going to win in the long run.’
Jenn Lee agreed.
“I think the consortium that nails the host agency model and how to support a host agency is going to win in the long run,” she said.