Western Agencies Maintain Strength

Number of locations, revenues remain strong despite nationwide drop

By: Lisa Jennings

Though the number of agencies nationwide has dropped, strength in the West has allowed it to maintain its market.

With just over 30 percent of the nation’s travel agencies in the West in 2002, those Western agencies produced nearly 32 percent of the total nationwide agency revenue.

And Western travel agencies appear to be going strong. More travel agencies in the West (16 percent) earned $5 million per year in revenue or more in 2002 than in any other region.

And those agencies generated a total of $21.7 billion, more than half of the total revenue for Western agencies for the year.

Other than issues related to destinations service, agencies in the West have faced the same challenges as those in the rest of the country over the past few years, said consultant Bruce Tepper, vice president of Joselyn, Tepper & Associates.

But, he said, “Western agencies have one advantage: Most Western states are growing.”

For people like Tim Smith, owner of San Diego Travel Group, which falls in the more-than-$5 million revenue category, survival over the past few troubled years has been a matter of adapting to the changing marketplace.

“As commissions went away, we had to focus on what we had to do to make a profit,” said Smith.

One change has been shifting to compensation-based pay higher-performing agents earn higher pay.

“We saw across-the-board increases in performance among both corporate and leisure” sales, said Smith.

As the concept catches on, Smith predicted, “We will see fewer agencies and agents, but they will be more productive agencies and more productive agents.”

San Diego Travel Group has also been building its Internet presence over the past few years.

The company nows offers its vacation-hotline.com, a Web site that focuses on all-inclusive vacations and has brought in many clients from outside Southern California.

“Seventy to 80 percent of agencies have Web sites, but most are passive,” said Smith. “They’re nothing more than billboards.”

His company’s Web site allows clients to book direct, as well as offering packages and promotions. “Now we’re one of the three or four top sellers of Club Med in the world,” he said.

Doug Fox Travel & Cruise in Seattle also beefed up its Web site this year, and has plans for more upgrades in 2004.

The agency, with 11 offices in the Puget Sound area, has a partnership with Passport Online, which provides cruise, tour and travel content.

And the agency plans to launch a new program with Cruise Partners to allow clients to book cruises direct through the Web site, dougfoxtravel.com.

“It’s all about strategic partnerships,” said Thomas Kratsch, director of marketing for Doug Fox Travel and sister company U.S. Travel in Anchorage.

But it is perhaps one of the most low-tech efforts that has helped the agency succeed over the past few difficult years, said Kratsch.

About 80 percent of the agency’s business is on the leisure side, and building corporate sales has been a goal over the past year.

“We’re aggressively going after the small to mid-sized corporate market,” said Kratsch.

How are they doing it?

Old fashioned cold calls, he said. “We’ve got a sales person in place who does nothing more than cold calls” off of a strategic list, said Kratsch. “It has been very successful.”

Despite an increased dependence on technology, direct contact between agent and client remains a strong selling point.

It is that contact that allows agents to better demonstrate their role as a service provider.

Tepper noted that he has heard from several agencies recently who made a major investment in building a Web site to better automate the process for clients. Tepper said some agencies now are finding that clients say they prefer calling the agency’s toll-free number found on the Web site.