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Host Agencies-Meeting Agents' Needs

March 1, 2008 By: George Dooley Home-Based Travel Agent
 

Experts weigh in on the issues surrounding this key component of the industry


Peter Stilphen, president of Coral Sands Travel, celebrated Valentine's Day by launching a new organization for independent travel agents. His new STARS group—the name stands for Service, Training, Achievement, Recognition and Support—will focus on the needs of home-based independent agents—the fastest growing segment of the retail distribution system.

Stilphen, a veteran agent and former chair of the Professional Association of Travel Hosts or PATH, designed STARS to meet the needs of professional agents. It excludes host agencies, suppliers, consortia and agencies from its ranks. He wants to build STARS into a member-advised organization for the individual agent.

He is also well aware of the paradox: Stilphen is the founder of Carol Sands Travel, which is a successful host agency with 500 members, and founder of an independent agent group. In an interview with Home-Based Travel Agent, he said he believes the two are compatible if the two separate interests are kept apart—which he pledges to do.

"PATH will do a great job of representing host agencies. STARS wants to tackle the needs of professional agents—the CTC's, for example—that are concerned with gaining recognition for their achievements and expertise. Hopefully, the time is right for a group like STARS."

Stilphen's formation of STARS and last year's creation of PATH underscore substantive changes now underway in travel distribution. The use of independent agents is transforming the industry, bringing agency hosting to new prominence. It has also exposed long-standing problems that are proving tough to resolve.

Card mills and multilevel marketing companies are the two problems that most concern Stilphen. While he has condemned both, he also believes that the relationship between host agencies, independent agents and suppliers bears watching, along with complex issues of agent accreditation and perks.

Stilphen is a staunch advocate of professionalism and a persistent critic of pseudo agents and perk-driven, ID-card flashing imposters. He has urged reforms, including tougher standards for issuing ID cards by CLIA. He is also a vociferous critic of companies that he believes are card mills and MLMs.

"I continue to urge action by professional travel agents and responsible suppliers to enforce sensible rules on travel perks. Professional agents should make their views known and support suppliers who recognize and differentiate the professional from the pseudo agent," he argues, congratulating RCI and Carnival Cruise Lines for new, tougher policies.

Stilphen's "take no prisoners" approach to alleged card mills and MLMs is reflected in his Coral Sands America's Host Agency Newsletter, where Stilphen names the companies he believes are card mills or MLMs.

While Stilphen often feels isolated by his battle against card mills and MLMs, the reality is that he is not alone. One piece of evidence is a recent online petition opposing card mills and MLMs that drew nearly 2,800 responses from travel agents (and a few suppliers). Home-based agents get the support they need from host agencies

Sponsored by travel agent John Frenaye of the JVE Group, the petition urged suppliers to act against companies believed to be MLMs and card mills. Among the favored targets of agents' anger was the often beleaguered, but profitable, YTB. On the plus side, Royal Caribbean International won high praise for its decision to stop dealing with YTB.

Both Frenaye and Stilphen see the card mill and MLM problems as two indications of a central challenge: How does the travel industry maintain the integrity of its products and services to consumers?

They argue that a flood of perk-driven, self-interested, nonprofessional agents with minimal training or skills passing themselves off as travel agents is hurting the industry, including suppliers. They believe in professional standards and point to the decades-long struggle of groups such as The Travel Institute to develop professional education.

Such concerns are also reflected by the Associations of Retail Travel Agents' (ARTA) current efforts to create a new agency accreditation and ID card program. And they underline the attractions and successes of the Cruse Lines International Association (CLIA) and the International Air Transport Association (IATA/IATAN), as well as the strong appeals of Outside Sales Support Network (OSSN) and National Association of Commissioned Travel Agents (NACTA).

"These issues are all related and reflect the industry trying to find viable solutions," Frenaye believes. The scores of newentrants who offer direct-to-the-public deals of deeply discounted travel and the opportunity to reap benefits—includingunreal commission income and hard-to-get perks, are a danger to the industry, he believes.

"The Internet has encouraged these organizations and offers. Many are knowingly fraudulent. Consumers must be wary. They simply don't know how to separate legitimate offers from hosting agencies and the online scams," he argues. While the Federal Trade Commission (FTC) can help, it's up to the travel industry to regulate itself.

The scams also impact legitimate host agencies. The host agency seeking qualified independent agents faces the challenge of how to weed out the hobbyist and perk-driven from those who want to build a career or a business. The appeals of a YTB with 135,000 referring agents are substantial—at least to the outsiders.

The Value of Hosts

Although card mills and MLMs are "hot button" issues, what is now driving the legitimate host agencies in a highly competitive industry is sound economics and developing viable hosting programs.

Successful travel agencies have been quick to realize the value of hosting independent agents and are moving aggressively to develop the marketing and technology programs to support profitable, productive networks.

True, "hosting" has been around a long time, but what is happening now is expansion of hosting networks to increase sales, deliver client services and expand markets. Productive and professional "hosting" is widely viewed as a key to future growth.

But host agencies face real challenges, including recruitment and training of agents, developing compensation plans, applying technology to enhance communications and productivity, maintaining service standards and performance. While there are no accurate figures, collectively, host agencies have made a multimillion-dollar investment in new technologies and marketing to ensure members' success.

There appears to be no single business model for successful host agencies. Some are corporate agencies such as ProTravel International, a New York-based agency with a 70/30 corporate-to-leisure mix, which formed a division, Virtually ProTravel, to handle its 75-plus homed-based agents.

Other host agencies, such as San Diego, CA-based America's Vacation Center (AVC), are focused on leisure travel sales with a strong nationwide network of hundreds of agents—full and part time. AVC has 60 chapters, its own propriety technology and has an extensive training and incentive program to support its agents. Unconfirmed 2007 sales have been estimated at more than $100 million.

Nexion is another major player among host agencies. Led by Jackie Freedman, CTC, Nexion has more than 2,000 members and a skilled management team that delivers quality programs to its receptive membership base. The host agency also has an outstanding advisory board of agents who have input on policies and programs. Nexion also offers the advantage of being part of the Sabre Travel Network, which now includes the TRAMS Marketing Alliance (TMA).

Another major host agency is MTravel, the home-based division of Montrose Travel. Andi McClure-Mysza, who is president of MTravel and newly elected chair of PATH, is an articulate champion of host agencies and independent agents. Like other major host agencies, MTravel sets an aggressive pace in innovative marketing and technology programs that assure MTravel and its members of responsible growth.

Another prominent host agency is Magellan360, led by Pam Miller, CTC, Like Mysza, Miller is well informed and a champion of independent agents' value to hosts and to clients. She is committed to professionalism and is active in PATH. Magellan360 estimates its sales at $160 million with approximately 180 members. As with other major groups Magellan360 seeks to attract new independent agents to its ranks and offers an extensive support program including technology.

CruiseShipCenters, a Vancouver-based group, who launched its CruiseShip.com brand for U.S. host agents, has still another take on hosting. With a strong track record of growth in Canada, CSC entered the U.S. market with a matured program, including tested marketing and technology platforms. CSC's entry also underscores the attractions and power of the U.S. market that drives much of the world's travel industry.

Another factor often overlooked in considering host agencies is the role of agency consortia, franchisers and cooperatives. The agency groups are being changed by the growth in independent homed-based agents. Today's host agencies are looking at their consortia, such as Vacation.com, for support. With more than 5,100 members, Vacation.com has hundreds of host agencies and thousands of independent agents.

Host agencies see their consortia affiliation as assets. America's Vacation Center's co-president Brad Anderson believes AVC's membership in American Express' Representative Network delivers real advantages, including instant client recognition of one of the world's best-known brands.

Powerhouse Hosts

Travel Planners International is another example. Headed by Tony Gagliano, CEO, TPI has 1,200-plus independent agents and sales are estimated at $90 million-plus. Another innovative program, YourNameTravel.com was launched in 1994 by Dennis Sohn.

TPI uses the Vacation.com logo in its advertising and offers access to Vacation.com's Engagement program as a recruitment tool.

Cruise Planners, another major host, now managed by Michelle Fee, had more than 650 member agents and was acquired by American Express. The group has annual sales in excess of $100 million.

High-tech companies and franchisers have also seen the advantages of working with home-based independent agents and agencies. Amadeus, the global GDS that also owns Vacation.com, entered the competition in 2004 with Agenta. Agenta targets independent contractors/agents with a strong support program.

Carlson Leisure Group, now Travel Acquisitions Group, developed a cruise-focused independent agent group in SeaMaster Cruises. Travel Counsellors, a global host agency with 850 agents, recently announced its expansion into the U.S. The U.K.-headquartered firm has $330 million in annual sales.

Uniglobe Travel was one of the first to develop programs focused on home-based agents with its Uniglobe InHouse Travel. InHouse Travel was formed in 1995 and is now complemented with ProCentral, and ProCentral/Tour and Cruise programs, depending on the needs of the agent.

Two hybrid groups stand out as advocates and champions of independent agents, notably OSSN and NACTA. Both groups are major players in the education and training of independent agents and, while competitive, are proven defenders of independent agents.

OSSN's founder Gary Fee and NACTA founder Joanie Ogg have led the charge to win industry recognition for the role of independent/home-based agents. They have also fought for better relationships between hosts and agents and host agencies and suppliers.

What it Boils Down To

What's the bottom line? Today's home-based independent travel agents have a score of financially sound host agencies to choose from. This includes many strong smaller agencies with a powerful presence and expertise in local or specialized markets. They have highly competent professional managers and programs that are tested in the marketplace.

Many hosts can tailor programs—including compensation—to the needs of productive, contributing agents with potential. And they can deliver not only affordable technologies, such as booking engines, but high quality marketing focused on delivering value and high integrity services to the traveling public. The dialogue has moved beyond commission splits to productivity and professionalism.


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