Travel agencies map out new routes to succeed

Travel agencies hit head-on by airline commission reductions over the last decade, then sideswiped by the Internet's incursion into their territory,were left reeling as an industry.

In the Truckee Meadows, says Leonard Wohletz, president ofWelcome Aboard Travel at Reno's Airport Square, half of the agencies that were doing business here 10 years ago are gone.And among those left standing, just a few are flourishing.

The industry lost chiefly mom-and-pop agencies, adds Bradley Seitz, president and chief executive officer of Topaz International, Ltd., a national firm that audits airfare for the business travel segment of the industry.

That happened when airlines cut travel agency commissions, says Seitz.

The event is etched in the minds of travel agents.

It began in the mid-1990s.

The airlines, which had been paying about a 10 percent commission, lowered it to 8 percent, then to 5 percent, then, two years ago, to zero.

Agencies built their business around those commissions, adds Seitz.

Those that could not adjust their strategy fell by the wayside.

Ten years ago, the industry attracted a different breed of agent, says Wohletz people who like to travel (it's still a magnet to those) but also part-timers and agents working just enough to partake of the agent discounts and familiarization tours hosted by cities, cruise lines, and tourism agencies.

Not any more, he says.His agents are all fulltime.

When the airlines stopped paying agencies two years ago, the travel industry began charging fees that typically run from $25 to $35 for a domestic ticket.

"The airlines effectively raised their rates," says Suzette Vides,who

owns Business Travel & Tours in Reno with her husband, Stuart Vides.

"It was a hidden increase to the traveler."

The change in the fee structure caused a fundamental shift, adds Janean Peterson,who owned Hello World Travel in Sparks with Julie Harris until February of this year,when she sold it to Rio Grande Travel, an Albuquerque, N.M., company.

The fee structure change, coupled with the difficulties and the downturn in the industry caused by the terrorist attacks of Sept.

11, 2001, served to weed many agents out of the business.

"Many got into the business for the love of travel," she explains,"not because they were good at business.After 9/11, the fun went out of it."

And after the airlines stopped paying commissions, agencies had to rethink their strategies.

Their paychecks no longer came from the airlines.

They came from the traveler.

"You had to have a different mind-set," adds Peterson.

"Agents had to change their self-image."

They had to embrace one thing that the Internet and that buying direct from the airlines was not giving the traveler customer service.

Says Suzette Vides: The change in fees in general caused agencies to add value for the customer.Her agency,which focuses on business travel, has carved out a niche for itself in the corporate client world.

One of the big additional values that attracts business clientele travel management and reports.

Another piece for her business, as well as other agencies, are negotiated discounts on air, hotel, car, business and vacation packages.

Discounts are important in a climate that has seen a lion's portion of its business migrate to the Internet.

Seitz quotes figures that show travelers saving money when using a travel agency.

Nevertheless, recent statistics gathered by the Travel Industry Association report that nearly 64 million travelers 30 percent of the U.S.

adult population used the Internet in 2004 to get travel and destination information.And 44.6 million actually booked something online.

The Internet can help the travel industry, says Wohletz, because it educates the customer about places, cultures, activities, and regulations.

He advises customers to use it, in fact, if they're commuting to Vegas for the day.

It's convenient for that sort of quick, easy ticketing.

The Internet will most likely meet the deal he can provide.

But for anything more complicated, an agency can meet or beat the Internet's price.

But price though a huge factor is not the only one driving the travel business.

Wohletz's business has adjusted in other ways through the years.Welcome Aboard Travel was based heavily 65 percent on business travel five years ago.

Today, it's about 50 percent business, 30 percent cruises, and 20 percent individual travel, chiefly tour packages.

Hello World Travel has seen a similar shift, says Peterson, moving from a ratio of 60 percent leisure, 40 percent corporate, to one with 70 percent leisure.

The corporate end of the business, says Suzette Vides, has evolved along with the industry, expanding to include Web interfaces for corporate travel management, along with various levels of corporate travel reports.

Included, too, for the larger agencies, are volume rebates or over-ride percentages.

The next evolution on the horizon, say all four industry experts, is consolidation.

Just as the mega-travel businesses like American Express are gobbling up smaller firms, the regional businesses can be expected to consolidate.

"Some of it is quiet," adds Seitz."It's growth through acquisition." And it's all about clout.

Larger agencies buy more tickets and more cruise packages, procuring better discounts, along with over-rides for their volume.

Welcome Aboard Travel has had a consortium buying relationship with WorldTravel, says Wohletz, since 1996.

It gets the Reno agency in on better prices and discounts.

Meanwhile,Hello World Travel is pleased with its sale to Rio Grande Travel, says Peterson.As part of the sale contract, she and Harris have stayed on as partners together, seeing the new agency through for at least the next two years,with options to continue.

And the benefit of selling and becoming an employee? "We have more buying power," says Peterson."More buying power with the airlines, better pricing, higher commissions, and we get more preferential treatment."