Introduction
In the case of the travel agency industry, necessity is the mother of reinvention. It is mandatory in the age of technology for agencies to continue to make themselves valuable to travelers and corporations, and this year's list shows that if sales are any indication they are doing that very nicely, thank you. Here are some of the highlights:
• As the number of the world's billionaires proliferate, so do the number of billion-dollar travel agencies, as 13 companies achieved that heady level of travel bookings.
• Despite all that heft at the top as well as continuing consolidation, there were still 55 agencies achieving the minimum level of $100 million to attain a ranking on the 2008 Power List.
• Midsize to large agencies continue to affiliate with global groups like HRG, BCD and American Express. While the last couple of years have seen the entry of companies built on network and franchise models, those continue to appear. A new one this year is Nexion, a subsidiary of Sabre Holdings.
• Similarly, globalization continues to allow regional agencies to affiliate with global companies and associations to establish an international presence.
• Hosting is fueling growth at many agencies, which are capturing significant sales through independent travel sellers.
• Through a combination of hosting and smart technology, many agencies are able to produce higher sales with a smaller staff.
• The biggest did get bigger, but in the face of the slowing economy, at slower rates of growth. American Express moved from $24.2 billion to $26.4 billion and Carlson from $22.1 billion to $24.9. Expedia did take a somewhat more significant leap, from $17.2 billion to $20 billion.
• Despite the larger number of agencies overall, there continued to be mergers and acquisitions. Christopherson merged with Andavo Travel, which has been on the Power List in the past, to form a corporate entity called Christopherson Andavo Travel. As for acquisitions, Travel and Transport purchased Abacus Travel (in January, so those revenues are not included), which had not been a Power List company but was sizeable nonetheless. Travel Acquisitions Group (formerly Carlson Leisure) purchased TraveLeaders, which is maintaining its brand identity. And with America on sale, foreign interests moved in. In one large deal, Flight Centre, an Australian company, bought Liberty Travel, which will also maintain its own brand identity.
• Several companies were taken private, or their parent companies were taken private. Among them were Tzell Travel, bought out by its own management, and Travelocity, as part of Sabre Holdings, taken private.
A phenomenon that has now taken hold and is escalating is the hosting of outside agents in efforts to save on costs and take advantage of technology. More agencies reported hosting agents, and those that already were hosting reported hosting more. Some companies, like Nexion, are basically hosting entities. Otherwise, some companies reported hosting large numbers of outside sellers. They included: Travel Acquisitions Group (408); Tzell (270); Ovation (55, representing $60 million in sales); Valerie Wilson (195); and the Travel Authority (100).
And again, while most of the Power List companies are business-oriented, many of the largest focus on leisure, frequently because they are Internet-based. Among those online leisure leaders were: Expedia, Travelocity and Priceline; traditional leisure leaders (though of course with their own online bookings) were STA Travel, Travel Acquisitions Group, Travelers Advantage, AAA and Liberty.
The Power List is all about size and represents an effort to rank the nation's top travel sellers in terms of the total dollar volume of annual sales. That simple starting point, however, quickly leads to complexity.
For example:
• What is a travel seller? For this list, Travel Weekly defined travel sellers as intermediaries that sell travel products through any medium (electronic and telephone, for example) directly to consumers.
• Why were some companies treated as single entities and others as conglomerates? That depended mainly on whether a company had a unified ownership and/or corporate structure.
Travelocity, for example, is part of a larger entity (Sabre Holdings) but reports its own sales separately. AAA is treated as one entity, because it has a national structure and is a not-for-profit organization. While individual clubs have a great deal of autonomy, they operate collectively under a national brand.
• YTB has to be singled out because it faced another year of controversy because of the structure of its business -- losing IATA and Royal Caribbean accreditation. Editors checked with the company multiple times to ensure that its reported total represented only direct travel sales, not referrals or any other nonqualified revenues.
With all the changes to this industry, the Power List remains remarkably stable year to year, though bigger changes periodically appear, as with the emergence of online agencies. Ironically, one of the two entirely new entries this year is Linden Travel, a luxury travel consultancy that has managed to maintain its luster as a "boutique agency" while growing to more than $100 million.
With these figures representing 2007, when the economy was slowing but had not yet hit a trough, it will be interesting to see if these powerhouse companies can sustain their momentum when the 2008 rankings appear a year from now.
Methodology
Once again for the 2008 Power List, Travel Weekly requested that gross sales volume, the primary number for ranking, be certified by a company's owner, CEO or CFO. Responses showed that most companies were happy to cooperate with that stipulation. In a small number of cases, certification was made by an executive at the vice presidential level but with financial oversight.
In several cases (as with Priceline), sales totals are based on publicly disclosed information because the companies are publicly held. In a couple of instances, privately held companies offered estimates; these included BCD Travel and Travelocity.
Despite the Power List changes, a number of companies that may have qualified opted not to participate. In some of these cases, Travel Weekly estimated their sales based on published material and/or discussions with other parties in the industry.
Where a company did not certify its own sales figure, the source of its sales is explained in parentheses.
The survey on which these rankings were based included questions involving sales figures; ARC sales; travel-related subsidiaries; percentage of sales from business, leisure, etc.; corporate structure; and others. There were several open-ended questions about recent and planned developments to which companies could reply in any way they felt appropriate for them.
In an effort to keep up with relentless changes, questions were added, removed and tweaked to make them relevant.
Responses to the questionnaire determined the length of the profiles that accompany each listed agency. Some companies supplied a minimum of information on developments in 2007 or on the company itself; others had a lot more to say. Companies were offered the option of having an executive interviewed by a Travel Weekly editor. Several took advantage of that opportunity.
The questionnaires that provide the information for the Power List were sent out early this year to companies that:
• Had appeared on the list in previous years;
• Had been in the news because of acquisitions or had grown for other reasons; or
• Had contacted Travel Weekly believing they qualified.
All questionnaires were sent by email. However, a few were returned by fax (sometimes emailed, as well).
While all cooperating listees did certify sales, it must be kept in mind that even those numbers are difficult to verify because the majority of travel sellers are privately held and under no obligation to disclose financial data. Also, there is no commonly accepted standard for calculating sales volume, and there is no clearinghouse in the U.S. that tracks nonairline sales, as ARC does for airline sales.
Where possible, Travel Weekly sought to confirm accuracy in the figures by referring to other data and to articles published in the past year. We also reviewed responses for consistency and used whatever resources we had at our disposal to ensure accuracy.
There may be companies that should be on the list but that escaped our attention. Representatives of such companies should contact Travel Weekly Managing Editor Rebecca Tobin at [email protected] so we can send them a questionnaire for next year's edition.
To view the survey in its entirety, click here.