Through a combination of hosting and technology, many agencies are able to produce higher sales with a smaller staff.
But the forces at work in travel are not a rising tide that is lifting all boats. There remains a widening gap between the Big and the Truly Big, with a $6 billion space now separating the sales of Nos. 7 (Orbitz Worldwide) and 8 (AAA).
And the Truly Big did indeed get bigger: American Express Business Travel, the No. 1 seller on the Power List, increased its sales by 17.5%. Carlson Wagonlit Travel (No. 2), which acquired Navigant International in 2006, reported a 33.7% increase in sales.
Familiar trends
Mergers remain a popular way to bulk up and, as in previous years, the Power List includes agencies that have recently combined. In these cases, the Uniglobe Partners (No. 40) entity among them, the ranking is based on what the joined company would have realized in sales in 2006.
Along with consolidation came more spin-offs. Notably, Travelport was spun off from Cendant to become a purely travel-focused company.
Other trends continued or accelerated. For instance, the giants in online travel enjoyed significant gains in sales, though not at the explosive growth rates of recent years. Sales at Expedia (No. 3), jumped 10.3% to $17.2 billion. Travelocity (No. 6) enjoyed a heady 35.8% increase, to $10.1 billion.
Orbitz Worldwide, which is the travel sales division of Travelport, is No. 7. Priceline moved up a notch to No. 9.
Many agencies saw large leaps in sales with little change, or even a drop, in the number of employees. For instance, Travizon (No. 15), increased its sales from $660 million to $732 million with 436 employees. Tzell (No. 17) added $100 million in sales year over year but added only 45 employees.
One reason for some of those numbers is the growing trend toward hosting outside agents, at-home travel sellers or brick-and-mortar agencies that don't have ARC appointments.
Travel and Transport (No. 13) reported hosting 22 outside travel sellers who produced $5 million in sales; Ovation Travel Group (No. 24) reported $62.5 million in sales from outside agents; and Travel Store (No. 32), reported that $59 million, nearly a quarter of their total sales, came from outside agents.
Sellers specializing in business travel management continued to dominate the Power List overall, but six of the companies in the Top 10 are primarily sellers of leisure travel. (For more on leisure agencies, see box below, "Some agencies get large on leisure.")
Questions
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:
Why are 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) but reports its sales separately. Carlson Wagonlit is half-owned and Carlson Leisure Group is fully owned by Carlson Cos., but they operate separately.
AAA is treated as one entity because it has a national structure and is a nonprofit organization. While individual AAA clubs have a great deal of autonomy, they operate collectively under a national brand.
Looking ahead, it will be worth watching to see if the affiliate-based companies will be able to maintain their growth rates, who will gobble up whom and who will affiliate with whom.
Every year brings more than a few surprises.
To view the survey in its entirety, click here.
How Travel Weekly's Power List ranking was determined
Once again for the 2007 Power List, Travel Weekly requested that gross sales volume, the primary number for the rankings, be certified by a company's owner, CEO or chief financial officer. 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 president level but with financial oversight.
In several cases, such as Priceline (No. 9 on the Power List), sales totals were based on publicly disclosed information because the companies were publicly traded.
A number of companies that might have qualified opted not to participate for a variety of reasons. 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 data is explained in parentheses.
The survey on which this ranking was based included questions involving sales figures; ARC sales; travel-related subsidiaries; percentage of sales from business, leisure, etc.; corporate structure; and other matters.
Included were several open-ended questions about recent and planned developments to which companies could reply in any way they felt appropriate.
For the first time, questions were included referring to the hosting of outside agents and fulfillment for third parties, so that sales attributed to these activities could be separately identified.
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 2006 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 2007 Power List were sent out early this year to U.S. travel intermediaries that had appeared on the list in previous years, had been in the news because of acquisitions, had grown for reasons other than acquisition or had contacted Travel Weekly believing they qualified.
All questionnaires were transmitted by e-mail. However, a few were returned by fax.
While all cooperating companies did certify their 2006 sales, it must be kept in mind that even those numbers are difficult to verify because the great 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 qualify for the Power List but that escaped our attention. Representatives of such companies should contact Dennis Schaal at [email protected] so we can send them a questionnaire for next year's edition.