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Cooperative CompetitionNovember 4, 2010 By: Jena Tesse Fox Travel Agent
Brands within The Travel Corporation USA share challenges—and solutions
The Travel Corporation USA President Richard Launder (from left, first seated) with his division presidents (from left): Jim Holden, African Travel Inc.; Christopher Ghaye, Destination America; Nico Zenner, Brendan Vacations; Guy Young, Uniworld River Cruises; Paul Wiseman, Trafalgar; Marc Kazlauskas, Insight Vacations; and Greg Fischbein, Contiki Holidays
There is a certain security in partnerships, but a certain risk as well. While two businesses joining forces may find financial stability together, they may also lose the qualities that make each unique.
Unless, of course, the business is part of The Travel Corporation USA, popularly known as TravCorp. The corporation is the parent company for some of the best known tour operators in the business, including Trafalgar Tours, Contiki Holidays, Brendan Worldwide Vacations, Insight Vacations, Lion World Travel, Uniworld River Cruises and African Travel.
So how do these brands work together and keep their unique sparks at the same time? According to President Richard Launder, it’s a balance between two contradictory philosophies.
“We have a cornerstone philosophy we call ‘the sanctity of the brand,’” Launder explains, “and it means that the brands have to be able to operate quite independently of each other; that the brand president has to be able to run their brand as their own business more or less.” For example, he explains, one brand wouldn’t share its marketing plan with another. “We want the brands to be out in the marketplace, and we want the brand presidents to be able to run their brands by and large as they think fit.”
Of course, each brand is different in terms of product, from river cruises in Europe to safaris in Africa, and market, from college students to retirees. As such, Launder says, TravCorp has another philosophy he calls “the strength of one.” For some events, it makes more sense for the different brands to work together as a unit: “I would use Luxury Travel Expo as an example where no one brand necessarily is going to be able to afford to host the breakfast and put on a presentation, but collectively all of the brands can,” Launder says. “When we are sitting down talking to a partner, it certainly makes sense to apply the strength of one so that all of the collective market strength can come together and we can negotiate a better agreement than if we were trying to do this one brand at a time.”
Balancing the sanctity of TravCorp and the individual strengths of each brand has been a tightrope act for several years, but Launder believes that it is becoming easier to know when to apply which philosophy. “We like to talk about cooperative competition, so all of the brand presidents and the sales and marketing teams are ‘incentivized’ by the performance of their brand only.” None of the brands need to feel pressured by how well any one of the other brands performs, he continues, or even by how well TravCorp does as a whole.
Earlier, he continues, brand presidents preferred to run their businesses on their own. However, after the recession hit, they found more benefits in interbrand cooperation. “It was a really shaky time, and as with everybody else, business in 2009 really fell away,” Launder says. “We had to make a lot of changes in terms of how we ran our business, had to right-size our business within a range. And what we have all learned is that one great constant in our world is change, and you have to be prepared to go back to the well and revisit the way that you do things.” As a company, they had to be prepared to “reinvent what we do and how we do it.”
Which is not to say that surviving in a down economy was always easy, or pleasant. “The hardest part of any of this—I think any executive would tell you—is having to right-size your business for what you generate, and that comes with having to make some very painful decisions,” says Launder. “I don’t think anyone can downsize a business and not have it affect them emotionally in some way. It is ultimately the right thing to do, only profitable businesses survive in the long term, and we have got to right-size accordingly. That said, there is a business challenge in working through a recession, and nobody wants to wave the white flag. And we didn’t.”
There is still some healthy competition between the brands, Launder notes, but their relationships are also cooperative. “At the end of the day, we all sit at the same table,” he says. If the brands wish to meet with an important retail partner, he explains, it does not make sense to send five people on five days representing five different companies. Instead, they can coordinate their visits and work together as a team. “Obviously, we wouldn’t necessarily be able to do that outside of our own brands,” Launder says, “but within our own brands, we can, and that’s where there’s been a value-add to an individual agency.”
The Sum of its Parts
When asked about their relationships with TravCorp, almost all of the brand presidents referred to the “sanctity” of their companies, and to the strength of the partnerships.
Marc Kazlauskas of Insight Vacations points out that the company is able to make its own decisions about partners, product and price. “Collectively, we work to synergize the partnerships, buying and best practices,” he says. “Independence lets us create our own market for own product. We have the fluidity to move as fast as we need to.” The collective benefit of being part of TravCorp, he adds, is the financial strength and the ability to share ideas.
“Single brands can’t bounce ideas off peers,” he notes. “We can.”
With the financial stability of TravCorp behind the company, Insight was able to stay visible in the marketplace. “Others pulled back,” Kazlauskas notes. “We continued to market to agents.” This will be Insight’s best year yet, he continues, and he expects 2011 to be even better.
Nico Zenner was named president of Brendan Vacations this year, and is enjoying his new role immensely. Among the changes he is looking at are new upscale and luxury hotel products in continental Europe, where the company sees strong growth opportunity. Beyond that, his main goal is to expand what it already has, rather than adding new programs to the brochure. “The core inventory will remain as we’ve known it,” he says.
Like the other brands Brendan is responsible for its own sales, marketing and operations. But, he notes, “we do consult with other [TravCorp] presidents,” he says. “It’s good to be part of a family-owned, strong entity. That is a huge benefit, because on our own it would take longer. It helps us learn and adopt things that have worked well for other brands.” For example, they can share information on customers who have reached out to the brand’s other companies, and learn from experiences that other brands have had to deal with in the past.
Paul Wiseman, president of Trafalgar, says 2010 has been a “fantastic rebound year.” The company’s business improved more than 60 percent over 2009, and is even ahead of 2008. “When the economy turned, we saw more value-conscious customers heading to what was perceived as the extra-value destination,” he explains. Spain and Greece became very popular, but by 2010 the economy was strong enough for people to plan trips to destinations that had been perceived as too expensive. “We also saw a slight reduction in the number of touring days people were buying,” he adds, estimating a 10 percent decrease over two years in the length of stay. “That’s come back up in 2010, as well.”
A challenge Trafalgar is facing is the decrease of brick-and-mortar agencies. Without agencies on streets filled with brochures advertising the details of tours, customers have fewer opportunities to be educated by professional agents. “What we have to do is seek a more in-depth relationship with the agents [who] remain,” Wiseman says. As more agents expand their horizons beyond cruising, Trafalgar is helping them learn how to sell tours.
Wiseman sees some great benefits in Trafalgar’s relationship with TravCorp, mostly in terms of functions like accounting and technology. “Quite frankly, we wouldn’t be able to afford to constantly enhance that technology to improve our system at the back end if we were just a standalone business,” he says. “But when you have this great organization and many different companies contributing, you can have excellence in those things, because it’s not just brand confidence. It’s a series of businesses getting together to combine their resources.”
Contiki focuses on travelers aged 18 to 35, who can range from first-time explorers to honeymooners. President Greg Fischbein noted that these young travelers are looking to balance economy and the exotic with trips to places like Croatia. “Youth is interested in more than just the obvious,” Fischbein says. “They are expanding their horizons and they are checking out more places around the globe.”
Recently, Contiki and Trafalgar joined forces for their sales team, with Trafalgar agents now representing the Contiki brand. “With the position of the Trafalgar sales team, we have a much greater representation, much greater breadth and depth across the country to better service our agents and our agent community,” says Fischbein.
This cooperation speaks well of each brand’s unique strengths and willingness to help one another. For example, Fischbein says, Contiki has to be able to reach an emerging market. “We are able to speak to them in their language,” he says. The most successful practices, such as reaching out through Facebook, Twitter or video, can be translated to the other brands within TravCorp. “The best practices are shared,” he says, “and the challenges are shared.”
As a dedicated river cruise company, Uniworld caters to a decidedly niche market. River cruising is growing in popularity, and the brand is already well established. “We’re getting good feedback and repeat passengers,” says President Guy Young.
Uniworld, the only river cruise company in the fold, uses its connection with TravCorp differently than the other brands do. For example, when setting up hotel contracts in Europe for a pre- or post-cruise stay, the brand reaches out to other TravCorp companies for assistance. “They have the buying power and relationships,” Young explains. “But when we contract on the rivers, we do that ourselves, because that requires special relationships.” The biggest benefit of the relationship, he continues, is financial. “We were struggling, and they brought financial strength and resources. On their backs, we were able to invest back in the brand.” To that end, the brand will have three new ships sailing Europe’s rivers in 2011.
Another niche brand within TravCorp is Lion World Travel, which focuses exclusively on tours of Africa. A major misconception that Lion World is looking to overcome is the notion that Africa is not reachable for everybody. “It is!” says President Lucille Sive, emphatically. “Sometimes, packages to Africa are cheaper than a cruise would be.” To help agents feel more comfortable selling Africa, Lion World is launching a Platinum Club that will give members advance notice of specials, and will offer special deals for agents and their families.
Lion World’s focus on packages helped it stay afloat through the hardships of last year, Sive says. “Everyone is looking for a deal, so that worked well for us.”
African Travel also specializes in tours of Africa, and recently got a new president in Jim Holden. “They found, in me, someone who was born and raised in Africa,” he says. “They were looking for someone who has a passion for Africa—and if you come from there, you’re pretty likely to have that passion. But they were also looking for someone like me who had worked over here in the market in the U.S., and had a good understanding of the industry over here—how it worked, and our interaction with the travel agent community, advocacy of it, and so on.”
Holden hopes the travel agent community will feel more confident in selling trips to the continent. “African Travel is part of this large organization, and is, therefore, financially sound and suitably stable,” he says. “We are here for the long haul…I think that we have this very stable supportive parent behind us.”
Ultimately, Launder says, the benefits of The Travel Corporation can be found in its name. “First and foremost, it’s a travel company,” he says. “We live and breathe the travel space and nothing else. So all of our relationships, all of our friends, are within the industry. It’s hugely important in a more vulnerable time to know that there is this company standing behind all of these brands and giving them the opportunity to go into the market and do what they do. There are a lot of agents [who] would take comfort knowing that this is a big company with little or no debt [and one] that has stood the test of time. There is something good about that.”