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A Conversation with Matthew UpchurchJune 10, 2010 By: Susan Young Travel Agent
Matthew Upchurch receives his CLIA 2010 Hall of Fame plaque from Terry Dale, CLIA's CEO
photo provided by Cruise Lines International Associaiton
Last weekend at cruise3sixy in Vancouver, I sat down for a 30-minute interview with Matthew Upchurch, CTC, CEO of Virtuoso, to talk about his induction into the 2010 Cruise Lines International Association (CLIA) Hall of Fame as well as insight about his career and industry trends.
Upchurch, who began his travel industry career in the 1980s with two family businesses, Percival Tours and Upchurch Travel, now oversees the marketing, sales, technology and operational systems that have made Virtuoso one of the most respected and successful companies in the luxury travel arena. He is a past chairman of The Travel Institute and, most recently, served on the corporate advisory council for the American Society of Travel Agents (ASTA).
While many people projected the demise of the travel agent over the past decade— given the rise of the Internet— Upchurch, in contrast, never waivered from his view that skilled travel specialists would become invaluable to clients as knowledgeable advisors and experiential experts.
Secrets for Success
I asked Upchurch what factors or steps deeply influenced his career progression. “One I talk about all the time is that I had the experience of being on multiple sides of the industry,” he said. Upchurch’s father owned Percival Tours and was a founder of United States Tour Operators Association (USTOA).
“So I grew up as a tour operator and as a luxury supplier, but then we got into the retail travel business and also owned our own ground operations businesses,” Upchurch said. “And so, I always say that— to a very large degree— what I do today was born in having worked on multiple sides of the fence … and also having an empathetic nature.”
As a marketer years ago, he recalls that he and other suppliers often would say "if travel agents would just do this or that as we’re spending all these funds on brochures to help them sell."
Then, Upchurch said: “I became one, and thought ‘Oh my gosh, I’m in a 2 percent margin business, I control nothing, I’m at the mercy of suppliers and clients have never-ending demands.” So, he says, even something as simple as brochures and how they’re utilized can be viewed differently on different sides of the fence.
Having that multi-faceted industry experience helped him immensely. According to Upchurch, “I think that was really a defining stage of my life, so therefore the genesis of what API/Virtuoso became is ‘how do I build an organization that understands what are the issues on all sides of the fence and how can we bring people together?’ ”
A Vision for Innovation
Innovation became not just a buzzword to Upchurch, but a method of operation— always with the customer’s needs in mind. When Upchurch and his team put together the first business plan that really changed API from an operational co-op into a full active marketing organization in 1988-89, it looked at the business in unique ways.
For example, when the first Voyager magazine was ready to launch, the company didn’t ask suppliers to fund it. Instead, Upchurch said the organization went to its travel consultants with this thought: “We’re going to put our money in ahead of time, so that when we sit down with suppliers, we’re not going to say ‘we’ve got a great idea, will you fund it?' but [rather] 'we’ve put our customer lists together and we’re going to fund the printing of this, do you want to participate?' Well that’s a lot different negotiating position.”
That was one defining moment, Upchurch said. And he says beyond that, success has flowed his way because of a “constant focus on [discovering] what are the trends.”
Many years ago, Upchurch Travel was the second largest agency in the Dallas-Fort Worth area with more than 300 employees, and multiple locations within Texas and Oklahoma. Still, Upchurch says he instinctively knew: “I just don’t have the kind of resources to afford the kind of talent that [I need].” As a result, his company didn't have the ability to do what larger ones could. “So I think that was also a defining moment,” he said.
“What I really wanted to accomplish with API/Virtuoso [was] ‘how do we collect and build the team of people that none of us could afford individually?’ and that’s probably one of the things I’m most proud of,” Upchurch emphasized.
Focusing on Constituencies
Last weekend, Upchurch accepted the CLIA Hall of Fame Award on behalf of three constituencies. First and foremost, he praised his group of Virtuoso members— innovative and skilled travel professionals who have pioneered many new concepts in travel sales and service to customers.
For example, the Virtuoso Voyager Club, a program celebrating its 20th anniversary this year, is a good example. It provides cruise ship passengers with one-of-a-kind events at cultural landmarks, a professional on-board host, and a private shipboard reception to establish a sense of camaraderie.
Regarding that program, Upchurch says it was simply unheard of years ago for agencies to hand over their customer lists to a consortia or membership group. “And who had ever heard of independent travel agencies hosting each other’s clients on cruises?” Upchurch asked, noting that “we’re not exactly talking about a three-day cruise here.”
Instead, “you’re actually going to let another agency wine and dine and schmooze your clients for two weeks … [even] on a World Cruise of 105 days?” he said, with an incredulous tone. “But to their credit, these are a lot of things that the membership of Virtuoso [could envision] and look at what we could do collectively.”
Upchurch said his second constituency is on the supply side, and particularly suppliers in the cruise business “because our partners were some of the first to really understand what it was that we were trying to achieve with Virtuoso.” Friendships there, said Upchurch, are too numerous to list, but he wanted to express his appreciation to everyone he’s ever done business with in the cruise sector.
The third constituency, he said, is “the incredible team of talent that we’ve been fortunate enough to attract at Virtuoso."
I asked Upchurch to name the one person who most influenced his travel industry career progression and success. Without hesitation, he named Kristi Jones, Virtuoso’s president.
Somehow, he said he always knew intuitively, even at a very young age, that the secret to success was to understand both your strengths and weaknesses. He and Kristi work well together because they complement each other yet bring different skills and strengths to the organization.
Upchurch quips, “you really should focus on your strengths because if you spend a lifetime trying to improve your weaknesses, the best you can hope for is really strong weaknesses.”
It’s advantageous to align yourself with great people and understand how to create a team, he said: "What we were able to do as a team and how we were able to challenge each other and grow has been remarkable."
The Professional Agent and Social Networking
What’s really amazing, Upchurch commented is that “so many of the things we were saying [back in the ‘90s] have come to pass. We said then that the industry was going to polarize between the optimized commodity players and the optimized experiential players.”
Upchurch believed, though, that if great professional travel advisors would continue to elevate their game, they weren’t going to get knocked off. “They actually were going to become stronger and more in demand,” Upchurch said. “And that’s happening.”
Today, he said, a recent study shows that one-third of people evaluating travel online were actively working to find an offline travel expert to help guide them through the maze of choices and find the best experience.
“When I look at the evolution of social networking, I think [it’s] the best thing that ever happened to our profession," he said. "It’s about referrals, contacts and people. It’s about ‘I get my information from trusted sources, people I’m connected with.’ ”
He says great agents have always built their business from referrals and word of mouth. So, social networking perfectly fits into that scenario. According to Upchurch, even media mogul Rupert Murdoch lamented in an interview some time ago that he owns a media empire and yet anyone at a computer has the capability of reaching similar numbers of people.
Trends and Opportunities
We asked Upchurch about trends in luxury cruising as well as the robust growth of river cruising. He said it’s amazing and gratifying to see the cruise industry— and particularly at the luxury end— create more than just cosmetic changes to the product, which was the approach in previous decades.
In the past, “the technical and marine people ran the industry and the hospitality people were relegated to ‘Well you can do this, you can do that' but the evolution moved slowly,” Upchurch said. “But particularly in the last five or six years or so, I think the hospitality people have won. Now ships and environments … are being designed with the hospitality people in mind, and now, the technical and marine people are having to adjust.”
He sees the trend as a classic maturation of an industry, where marketing is valued not just for promotion but as an understanding of what the market wants and needs.
This can be even viewed in a policy change as simple as the muster drill, he noted, mentioning Norwegian Cruise Line's (NCL) recent announcement (following a few others) to do a muster drill without getting the life jacket from the cabin first. Upchurch asked: “How many years did that take [for change]?”
Will the industry continue to grow and what type of growth will we see? “I still think we’re a growth business, so I still think you’re going to see new entrants,” he said. And in the U.S., he is seeing many new entrepreneurs— people from other walks of life with non-travel backgrounds‚ getting into the business and buying some of the agencies.
As for river cruising, he said the progression has been amazing. “That is a great story,” he stressed, as “river cruising up until the last few years, it’s almost [been as though one turned] the clock back on the luxury segment back to when it was Royal Viking.”
Now he said the competition is intense and the suppliers are stepping up to enhance their products. “There is no question that sector [is on the rise] because what it’s doing is combining two fantastic things [cruising and destination touring]," he said.
What’s the marketing message? How do lines attract more luxury customers and develop new luxury customers? For years, he said, suppliers have compared per diem cruise fares to luxury resort rates and said “we’re such a better value.” While that’s true, sometimes when you’re a marketer, you need to ask a difference question, according to Upchurch.
His approach? Why would somebody be willing to pay a thousand dollars a night and not have their food included, not have all these other perks included? “Why would they be willing to pay that and not see the cruise experience as such a better value,” he stressed. “It comes down to the experience.”
To entice younger customers onboard ships, those people in their 30s, 40s and 50s, Upchurch said the cruise lines can’t go to Barcelona and leave at 6 p.m. Part of the issue, he noted, is that the cruise model of onboard revenue is such a major part of the business model that it has hampered some of the things cruise lines need to do— like staying late in ports so active travelers may enjoy nightlife and dining ashore— in order to compete with the non-cruise vacation choices.
“There’s where the river cruising is so hot, because it’s very destination intensive,” Upchurch said. “It lends to the trend that people are so well traveled today so they don’t want to do ‘If it’s Tuesday, it must be Belgium.’ ” He said river cruising gives guests a more intense regional experience in a focused destination.
A Note About Mexico
Upchurch’s great grandfather moved to Mexico in 1895 and Upchurch has an affinity for the destination. The drug violence along the country’s northern border has been such a problem for tourism entitities within Mexico, as people’s geography is sadly not good. So the drug violence, while far from most major tourism destinations, scares off travelers.
So, Virtuoso held its meeting this year in Mexico City, but Upchurch said he specifically choose the Mexican capital and not a beach resort, as he wanted his members to get a first-hand look at the capital. Mexico’s President Felipe Calderone spoke to agents during that symposium.
In turn, Upchurch reported that 97 percent of those who attended the symposium were pleased to have had the opportunity to go and see first-hand that it’s a vibrant capital city with much tourism appeal. There is no question that there are serious issues, said Upchurch, but he noted that the violence is primarily localized along the northern border areas.
“It’s sort of the good and bad of being the cousin,” Upchurch states, noting that if you’re far away and someone has a worse statistic [such as on crime], it’s kind of nebulous. “But when it’s part of the family [a North American destination that attracts Americans], because if you think of our borders as kissin’ cousins…. That’s when we in this industry have a responsibility to try and tell the truth.”
Vision for the Future
What vision does he have for Virtuoso five years out? “I see the evolution of what our Virtuoso members do…. We’ll continue to evolve into higher and higher levels of sophistication, which are actually going to improve, going to lead to what our mission statement has been since 2001, which is an actual elevation of the compensation and personal fulfillment of the front line travel agent,” said Upchurch.
He also believes the continuing professionalism of the business will elevate it so that it’s competitive with other consulting professions. “A lot of that [will be] driven by the sophistication of the clientele,” he said. “They don’t need human ATMs.”
Upchuch also stressed that Virtuoso will continue to expand internationally. Currently, Virtuoso is in 22 countries. Upchurch himself just returned from a World Travel and Tourism Council event in China and “had some interesting conversations” there.
“One of the things I also see happening in the next five years is that I think we’re going through another major evolution of marketing,” he said, noting he didn’t want to get into much detail as there were concepts and ideas to protect. “I still think there are some very interesting opportunities,” he stressed.