Agents of Change

 Robert Joselyn of Travel Agency Management Solutions (TAMS) and the Joselyn, Tepper &  
Associates consultancy firm

Acquiring and merging. Staying technologically savvy. Marketing to a niche. To keep pace with this ever-changing industry, your agency must be doing at least one—if not all—of these things, as they are the key to strong growth and sales.

But that's just pointing out the obvious. "There are a lot of agencies out there that are succeeding and growing and increasing profitability," says Robert Joselyn, president and CEO of the consultancy Joselyn, Tepper & Associates and the benchmarking service Travel Agency Management Solutions. "These things aren't new, it's just that some agencies are doing them better than others."

Here, Travel Agent profiles six successful agency owners to learn from.

Kate Murphy, the owner of Uniglobe Wings Travel in Blue Bell, PA Kate Murphy
Owner
Uniglobe Wings Travel
Blue Bell, PA

In the last two years, Uniglobe Wings Travel has acquired three agencies, all located on the east coast in locales ranging from Philadelphia to Kingston, NY.

"It's turned out so well that I'm always open to doing something like that again," says Kate Murphy, the agency's owner.

The acquisitions helped facilitate a revenue of $22 million last year, and Murphy says that the agency is on track to match that figure—if not surpass it—this year.

"We've been lucky that the last two agencies we purchased were owned by men who where thinking of retiring," she says. 

"That was good, because they weren't desperate to sell. We don't go out and target specific agencies. More likely it's a cruise account manager or a tour manger that says, 'So-and-so is thinking about selling,' and then we just start up a conversation with them."

As simple as it sounds, Murphy knows these proposals aren't something to be entered into lightly.

"We have questions that we ask," she says. "The agency needs to be using the same suppliers that we do, or it's not a good fit. I also look for longevity of the staff with the previous owner—it shows loyalty."

According to Joselyn, Murphy has the right formula. "It has its advantages if you buy right, not just in price, but where there are synergies," he says.

Even so, Joselyn says the M&A market is starting to cool. "The fact is that there are fewer acquisitions in the marketplace because a lot of the agencies that are not economically viable are getting out of the business," he says, "so the population has gotten smaller, but the quality of businesses has gotten higher."

Uniglobe Wings Travel business is split 50-50 between corporate and leisure bookings, with only four home-based agents comprising its corporate staff. The acquired agencies are all focused on leisure travel. 

"We felt that it was a good way to grow, and I still think that leisure needs to be brick and mortar," Murphy says of the acquisitions. "There are still people who want to go in and sit with someone to book travel," she says. "They know who and where you are."

Of the agency's booked leisure business, Murphy says that it's about 40 percent luxury and that the rest is midscale.

"We don't do any budget at all," she says. About 85 percent of bookings are Vacation.com suppliers, of which Uniglobe Wings Travel is a member and whose advisory board Murphy sits on. She also is vice president of her local American Society of Travel Agents (ASTA) chapter in DelawareValley and is president of Uniglobe Franchise Owners Association in the mid-Atlantic/northeast region. 

Even with her full schedule, Murphy continues to look for ways to grow. She says she doesn't currently have any acquisitions in the works, but adds, "We're always looking to acquire."

From left: Richard Leibman, chairman; Lara Leibman, senior vice president; Bryan Leibman, president of Frosch International Travel in HoustonBryan Liebman
President
Frosch International Travel
Houston, TX

Bryan Liebman, president of Frosch International Travel, a Signature Network member, has seen a lot of change since he joined the family business in 1999. "Our business has grown both organically and inorganically," says Frosch. "We've added agencies and hired new agents to service our existing client accounts." 

Frosch maintains offices nationwide, placing it among the top 50 agencies in the U. S., with dedicated divisions for corporate, leisure, offshore and marine, groups, meetings and incentives.

As an example of the company's growth, Liebman notes that in the last two years, Frosch International Travel, which is headquartered in Houston, has added six agencies.

"Agencies come to us because they like our business culture," explains Liebman. "We have core competency in areas such as IT and accounting, and this frees our agencies to concentrate on what they love best, which is selling and client relations. We attract agencies that specialize in high end service." 

When Liebman started in 1999, the company had a total of 50 agents. "Presently we have about 400 agents, including about 100 home-based agents, which is a growing segment for us," he says.

Consultant Joselyn says that it is common for successful businesses to have models built partially, if not wholly, around independent contractors.

"How to find them, support them and keep them in your corral is something of a business art form," he says, "and the guys that are doing it well are really growing their business."

Since 1999, the company has grown 30 percent every year due to both internal growth and strategic acquisitions. 

Frosch's business-to-leisure ratio has remained the same throughout their expansion, being about 55 percent corporate and 45 percent leisure, although the company continues to expand in both areas.

"The consolidation of retail travel agencies continues, and the acquisition field remains extremely busy," says Liebman, providing a counterpoint to Joselyn's assertion that the M&A market is cooling. "I see it continuing on the consolidation front, and being busier than ever."

Jerry Vaughn, president/CEO of World Voyager Inc.Jerry Vaughn
President and CEO
World Voyager Inc.
Federal Way, WA

Jerry Vaughn has done a lot over the past 18 months. Along with his business partner and wife Cindy, he's added a retail store, launched two web sites, moved his business from "cruise only" to "total vacation" and switched affiliations (he decided to drop the cruise franchise tag and team with Ensemble, adding a better mix of options for his substantial premium clientele). That's a lot for anyone's plate, but Vaughn is adamant that quality still matters more than growth.

"We are not looking to be big," he says, "just good at what we do."

Pithy, yes, but it doesn't mean that the expansion bug hasn't bitten Vaughn. His company, World Voyager Inc., snatched up one of its competitors, and Vaughn now runs two retail stores, World Voyager Vacations and CruiseCenter, both near Seattle, WA.

"We finished last fiscal year as our best ever," Vaughn says. He expects even better things this year.

"The trend so far this year is a little over 20 percent growth from year to date," he says. "All things being equal, we are encouraged that we will see increased revenue." Overall, Vaughn says his agency sold more than 1,700 cruises in 2006, mostly in the premium cruise market, but a substantial portion of his group business was with the mass-market lines.

Considering he started out in law enforcement and only has been in the travel industry for eight years, Vaughn's success story is remarkable. He attributes his strong growth to hiring and retaining the right talent. "We have hired some new personnel, redefined the duties and responsibilities of a few positions and retrained others," he says. His inside workforce has now doubled and he also retains four home-based agents for good measure.

The rosy outlook is, indeed, helped out by Vaughn's two web-based divisions. One, www.alaskacruiseagents.com, is designed solely for Alaska vacations; the other, www.meetingsonships.com, is for businesses looking to conduct meetings, conferences or workshops aboard cruise ships. "The launch of the two additional web sites has definitely impacted our growth," Vaughn says. "It has stimulated a significant number of quote and proposal requests from throughout the country, which broadens our market."

Vaughn says that his business mix is about 60 percent in the premium market, the balance in the contemporary or mass market. More than 60 percent of his business is still cruising, but he adds that the land and tour side is his fastest-growing segment.

Like most fortunate agents, he's been able to reap the rewards of his trade. His favorite vacation memory was a stay at Le Meridian in Bora Bora, which was only a precursor to a seven-day cruise on Regent's Paul Gauguin and a two-day stay at the InterContinental Beachcomber on Moorea in French Polynesia. "It may get better than that," he says, "but I don't know how."

Tom Carlsen, a Carlson Wagonlit Travel associate based in New York CityTom Carlsen
Travel Associate
The Leaders Group/Carlson Wagonlit Travel
New York, NY

Many "agents of change" feel that expanding their business is a necessity in order to survive. "We understand the impact of the phrase 'If you are not growing you are dying,'" says Tom Carlsen of Manhattan-based The Leaders Group/Carlson Wagonlit Travel.

And so the agency's owners took their businesses in New York, Clifton, NJ, and Philadelphia and placed them under a parent LLC, The Leaders Group.

They also took an active part in the selling process and brought in an additional $5 million in new accounts, as well as making their first acquisition of a $3.5 million agency in Nashua, NH, to grow the brand in the Northeast market.

Carlsen explains that business conditions were the driving force behind the expansion, thanks to a change in attitude in small to mid-size corporate accounts. "These accounts were moving away from a liberal policy of allowing employees to purchase their tickets via the web in favor of a managed corporate travel program and customized web booking engines that provided control spending and web-based reporting," he says.

The February 14 Jet Blue weather fiasco and others like it also contributed to increased revenue for agencies. "Those who booked on the web were left with the difficult task of finding an alternate way home," Carlsen says. "The companies with travel management companies were able to call their agent or after-hours support team to assist them."

The expansions have helped Carlsen's company to increase its annual revenue. "After the consolidation and formation of the LLC, we were at $120 million. New accounts and acquisition now has us at $135 million," he notes. "Our target for year-end 2007 is $175 million."

To deal with the expansion, Carlsen's company did increase their agents by six. They now have 89 agents, including 30 home-based agents and 22 independent contractors, some of whom they added with their Nashua acquisition.

When asked if his company will continue to expand, Carlsen responded, "Yes, with continued focus on acquisitions and marketing of new accounts.

"We will not take on any new business for the sole purpose of adding volume that will have a negative impact on our bottom line," he adds. So far, expansion has only helped that bottom line.

Lee Thomas, executive vice president of Jefferson, IN-based The Travel AuthorityLee Thomas
Executive Vice President
The Travel Authority
Jefferson, IN

As far as the travel industry goes, you can say that Lee Thomas and The Travel Authority (TTA) grew up together.

Thomas, now married with two children, joined what is now known as The Travel Authority 14 years ago, bringing a sales background to the then-small company, but had no prior experience working in travel. Formerly a financial analyst of a large automobile manufacturer, Thomas began at TTA in accounting and information technology, then spent several years managing the accounting and IT groups before taking on his most recent role as executive vice president. As Thomas climbed up the ladder, naturally his business did the same.

During his tenure at the company, Thomas has seen TTA become an American Express agency and buy more than 30 travel companies, expanding its regional strength and footprint. It continues to grow by selling its in-source solutions, such as it 24-7 service to other agencies.

For example, it offers sports fans an opportunity to travel through Champion Sports Tours, and various companies book through TTA to take their employees or customers on vacations arranged by Rewards Unlimited, which specializes in high-end incentives departures.

Perhaps the biggest factor that contributed to TTA's current success was the 2005 development of its SwiftTrip technology. Along with its two other partners, TTA formed this software development company that specializes in builder web sites and booking engines for the travel industry.

With this service, TTA was able to offer business and leisure travelers a local servicing agent at one of its 50 locations in five different states. If the end user needs to talk to an expert, they can, thus combining technology with person-to-person interaction. TTA has found a unique niche in airports that want to add booking capabilities to their web sites for their customers.

"We think any organization that is looking to expand its service offerings to members are also potential customers," Thomas says.

According to Joselyn, staying abreast of the latest technology is a key factor for agencies to stay afloat. "Some agencies understand that they're solution providers and they're doing that very well and charging for it," he says.

"In TAMS, we've got some leisure agencies who have embraced the web, not as a competitive threat, but as a marketing tool," says Joselyn. "They have obviously spent the time and the resources and acquired the know-how on how to compete and use the Internet as a communications and marketing tool."

Today. TTA is about 70 percent corporate and 30 percent leisure. TTA employs agents to staff its online desks, home-based agents for its 24-7 support centers and has an independent contractor program with about 105 agents. Additionally, the agency is booking about $300 million in sales annually through its six call centers, more than 45 retail storefronts and its web site, www.thetravelauthority.com.

Cindy Harris, owner and president of Carlson Wagonlit Travel's Lexington, SC affiliate officeCindy Harris
Owner and President
Carlson Wagonlit Travel affiliate office
Lexington, SC

"In this industry, you have to be an 'agent of change,'" says Cindy Harris, a Carlson Wagonlit Travel affiliate agency owner who has worked in the business for more than 25 years. "That's the nature of it. You always have to approach things proactively."

Harris recently expanded her South Carolina business, which she opened in 1999, by opening a second branch.

"I had a couple of agents come and say they really wanted to work with me," says Harris, who adds that the agents all knew each other and knew of her because of her local reputation. There wasn't room at her main office, which houses five agents plus Harris. After weighing her options, she decided to open a satellite office in Irmo, SC, about 12 miles away from her Lexington headquarters.

Calling this branch a "new concept," Harris says that the new office hosts four independent agents who are paid strictly in commissions and who don't necessarily work full-time.

"It's a win-win situation for all of us," she says. "They get to make their own hours, and since I'm not paying them in salary, they aren't taxed as much on their earnings. I get to keep a cut of their commissions. It's more incentive for them to go after business. The harder they work, the more profit they—and I—make."

Harris says the new office handles about 60 percent corporate travel and 40 percent leisure, while the first office has a mix of about 80-20 corporate to leisure travel.

Though initially it was tough to take the leap, Harris believes she made the right move. "At first it was scary," she recalls. "It was a brand new thing and it had been a while since I had opened up a business." A friendly work environment contributes to Harris' success, she says, and notes that all of her employees are female and that they get along "really well—no catfights!" she laughs.

Harris says the recent busy winter season has helped the new office grow, and that by next year "we should be very profitable." She says her company reports an annual revenue of $4.5 million, and expects to add to that significantly with the new branch.

As for whether she has plans for future expansion, Harris says, "We'll have to wait and see. I don't want to take away from my customers...right now, I'm happy."

—Dan Butcher, Dave Eisen, Joe Pike, Jennifer Merritt, Debbie Strong and Mark Rogers