Measuring Your Success

In today's travel industry, success can be difficult to define

Chris Russo, president and owner of Travel Junction in Denver, is successful. With six agents, Russo and his team work hard, take pride in offering quality customer service, constantly pursue innovation, love what they do and have fun doing it.

The money the agency makes might not rival the multibillion-dollar gross sales of behemoth online travel companies such as Navigant International and others in the West, but Russo believes that’s not all that counts.

“We don’t have to be an $80 million agency or have 50,000 clients to be successful,” he says. “Maybe in the public’s eye much of the idea of success is money. But for me, personally, success is working in this industry for another 20 years because I love it.”

Success has always meant many things to many people, reflecting differing objectives, goals and interests. From high gross sales or fat profit margins to the personal satisfaction of doing a job well, standards and measures of success are subjective.

While the more traditional financial measures of success will remain, business experts say that in today’s challenging travel market other measures such as those noted by Russo are increasingly taking hold.

“Success in today’s world tends to be equated with how much money you have, but that’s really not it at all,” says Bob Stalbaum, president of Havertown, Pa.-based consulting firm Strategies for Success.

“My definition really broadens the horizon for a lot of people to be successful: Success is the progressive and timely achievement of your goals,” he says.

Stalbaum, who has consulted with hundreds of agencies over the past eight years, said many get caught up in the grind of daily operations and lose sight of the real goals of success. “If we spend all our time doing the little things, then the big things never get done,” he says. “And those are the things that will help you achieve success.”

Stalbaum and others note that gross sales typically what many agencies divulge because they are privately held and not required to reveal financial data also need to be understood in context.

“The number that matters is what you bring home not gross sales,” says Bruce Tepper, vice president of Joselyn, Tepper & Associates Inc. A lot of agencies have low gross sales but are financially successful because their profit margins are relatively high, he says.

Tepper notes many agencies’ profit margins are a slim 1 percent to 2 percent, but specializing in an area can yield higher margins.

“Specialization is the key because you’re never going to beat an Expedia on price,” he says. “Let them have low profit-margin sales. Find areas where you have an interest and where there’s a market. And there are thousands of opportunities out there.”

Adds Stalbaum: “There are one-person enterprises, and 2-, 3-, 4-person boutique-type agencies that are doing $2 million to $5 million in business, but are working on 30 percent margins because the products they’re developing and the markets that they’re going after don’t have heavy competition.”

Tepper also notes that agencies are adopting new business models that are helping drive success.

As the traditional model of commission- and fee-driven agencies slowly fades, along with many commissions, some travel companies are choosing “merchant models.”

This strategy essentially turns an agency into a retailer, negotiating with suppliers for the best possible price, setting margins and markups, and selling on price and volume.

“You don’t have big margins and you do a fair amount of marketing,” he says. “It puts you in the same league as a Wal-Mart”

Another emerging strategy is the consultant model. “In a sense you’re no longer in the travel business, you’re in the travel advice business and get paid a fee for your expertise,” he says. “You pass through all discounts, etcetera, to clients, but in turn charge them a fee for your services.”

Stalbaum and Tepper note that as a growing number of agencies change business models, they also are factoring additional and broader measures into the concept of success, including customer service.

“Are your customers happy, satisfied and coming back?” asks Stalbaum. “That’s a real indicator of success.”

Ultimately, Stalbaum says, “There are two ways to ensure your success: Be brilliant at the basics and get the fundamentals for running any business down pat.”

Once those fundamentals are in place, success then means continuous improvement.

For Expedia, one of the largest online travel companies in the West with gross sales of more than $5 billion last year, financial success comes with an ongoing focus on continually meeting the needs of suppliers and consumers.

Expedia last week reported second-quarter gross bookings of $2.6 billion, up 53 percent over the same time last year. Net income was $41.3 million, up 106 percent over the same quarter last year.

Factors that have led to its sales success from marketing and customer service, to suppliers and technology platforms are continually adjusted to ensure the company is adding value to its offerings and services.

“It goes back to a relentless focus on creating a great company experience,” said Expedia spokeswoman Andrea Riggs. “I think that, if you’re focusing on the customer and their needs, then you realize what you need to develop to continue to meet their needs, and that’s where you find your technology innovation and your relationships with suppliers, and ultimately, your success.”

Riggs says Expedia also believes consumers will continue to need travel agents, particularly in the luxury market where consumers are seeking a special experience.

“We think that those travel agents empowered by technology are going to have a real advantage and niche in the marketplace, and there’s a real need for that,” she says.

For Russo at Travel Junction, competition from the large online agencies has helped him crystalize his steps to success.

“It’s prompted us to become more creative,” he says. “We look for every nook and cranny to do something value-added for our customer. ... And creativity breeds success.”

Russo has worked hard to be successful at all components of his business, building repeat clientele, using unique marketing techniques, forming joint ventures and taking risks in an effort to set his agency apart.

“Sometimes it works, sometimes it doesn’t. But that’s not failure, it’s a learning experience,” says Russo. “Failure is giving up; success is to keep on keeping on.”