MAITLAND, Fla. -- What's the difference between a travel agent and
a client?
That may sound like a no-brainer, but consider Global Travel
International here. After less than five years in business, Global
reported $100 million in travel sales last year with 135 employees,
100 of them inside reservations agents.
But the business is generated exclusively by some 24,000 people
in 50 states and a number of foreign countries who paid as much as
$495 for the privilege of booking travel through Global. And they
appear to book mostly for themselves, their families and
companies.
The company calls all 24,000 of them "travel agents," but a look
at the setup (paying a fee in order to book through a particular
service bureau, along the lines of a travel club) and their
productivity (less than $5,000 in average sales) leads some
observers to conclude that these "agents" are in fact clients.
In the words of Jay Lewis, president of the Miami-based
marketing consultancy firm Marketscope, those who buy into the
Global program are "customers masquerading as travel agents."
Global's youthful founders, president Michael Gross and chairman
Randy Warren, reject that proposition, but even they do not set
ambitious sales targets. They say they merely look for their
members to deliver business from "friends, family and
associates."
Retention of members is high, they report, with 90% renewing
their affiliation annually, paying another $100 in the bargain.
They added that more than 1,000 additional "independent agents" are
signing on each month.
After paying the fees, they are motivated to deal exclusively
with Global, and only those who shell out the fees to become
"certified travel agents" are eligible to book with the company,
after being issued a personal identification number and a photo ID
card.
"We have a captive audience who books Global travel," Gross
said. "They're not shopping us."
Effectively, Warren said, Global "is a marketing company wrapped
around a travel agency."
Claiming that Global is the fastest-growing company in the
Orlando area, Warren added, "You see the phones coming off the
hook. You can hear and feel the company growing."
The goal for 1999 is $125 million in bookings from 35,000
"independent agents."
Although Global issues training manuals to its "agents," they
are not required to make bookings. Rather, they phone the company's
inside reservations agents. The "agents" are so dedicated to
booking with Global that they bombard the agency with 2,000 calls
daily, Gross said, with an impressive ratio of one booking for
every 1.8 calls.
The company has grown so fast that it has moved several times,
now occupying 20,000 square feet at two sites in the Orlando area.
Its proprietary reservations system, overseen by an in-house
programmer, is composed of 150 PCs linked to Amadeus and the
Internet.
Facing a shortage of traditional travel agents, Global opened
its own school, which provides seven weeks of training in
reservations and sales, the partners said.
A central element in Global's recruitment efforts is an ongoing
thrice-weekly advertising campaign in The Wall Street Journal,
inviting readers to "slash your travel budget and become a travel
agent today."
The benefits, the ad claims, are "huge discounts" in such things
as "hotel rooms, car rentals, luxury cruises, first class upgrades
and vacation packages." Although the company promises "50-50 split
commissions," the commissions being split are "deemed not to
exceed" 10%. For air, the company offers not a 50-50 split but a
25% cut of the commission.
According to Gross and Warren, the target customers for the
Journal ads are owners of very small companies who are trying to
"control travel expenses by bringing them in-house."
To underscore the point, the ads tell prospective investors,
"Don't quit your day job." The advice is pertinent because, based
on the average booking volume of $5,000, commission income would be
$175, assuming that half of the business is air, according to
Travel Weekly's estimates.
At that rate, the average "agent" who paid $495 would not recoup
his or her initial and renewal fees until the sixth year in the
organization. To promote commissionable sales as well as member
travel, Global employs a team of eight full-time copywriters to
produce promotional handouts such as an eight-page monthly
newsletter, "blast faxes" and "blast e-mail."
There are also "hot tips" on the company's Web site,
www.GTIWeb.com. The material is enough to convince clients that
they are getting special deals, judging by Global's reported
booking volume.
A perusal of the material, however, does not reveal many offers
that cannot be found in the low-ball prices in Sunday newspaper
supplements. A phone call to several suppliers also revealed that
the offers were available to the general public as well.
Asked about the lack of concrete, high-powered discounts, Warren
said that was actually an advantage for Global. "We try not to sell
on price," he said. "We're not rebating. We are a vacation
store."
Gross agree: "We're about selling. If you get stuck on competing
on price alone, you've lost half the battle."
Nevertheless, the executives suggested that Global would become
more aggressive and perhaps resort to macho-type discounting at
times. "From the standpoint of the supplier, we're in a unique
position to move market share and influence the consumer," Gross
said. "So a cruise line can come to us with distress
inventory."
"Suppliers are banging on our door," Warren added.
They cited as principal suppliers Delta Vacations/Certified
Tours, Tauck Tours and Club Med for land vacations, and Carnival
Cruise Lines, Royal Caribbean International and Princess Cruises in
sea vacations.
Avis and Dollar are the principal car rental suppliers.
Continental and United are the principal air carriers, along with
"a very good relationship" with Delta. Looking at the future, the
executives said major developments are in store in the next six
months to a year, including "some acquisitions."
In another step, Gross said, without providing details, "We're
going to take this incredible structure and leverage it into new
travel programs." They added, however, that the company would
continue to center operations on its dedicated corps of "travel
agents."