Hotel Online Special Report

Orange County's Travel Agencies Continue
to Suffer from a Downturn in Travel
By Sandi Cain 
May 2003

Travel Woes Put Skids on Trips; Sales Down 2% at OC Agencies

Terror warnings, economic woes and a weakened airline industry all contributed to a 2% decline in sales to $796.8 million at the largest 19 agencies, according to the Business Journal's list of agencies, ranked by 12-month sales at their OC offices.

It was the second straight year of declining sales after gains posted in each year from 1993 to 2000. And 2003 doesn't look much better.

The war in Iraq and fears about SARS began when people typically book summer vacations, slowing sales and adding to the worry of tourist-dependent businesses.

"It's the worst condition this industry has been in since its inception," said Scott Shadrick, president of No. 4 TraveLeaders Group Inc. in Irvine.

Fifteen of the 19 agencies on this year's list generated more than 50% of their revenue from corporate clients, which has been the weakest sector since the 2001 terrorist attacks.

Shadrick said business had started to recover last fall until talk of war put the skids on corporate travel as early as October.

Steve Sedgwick, president of No. 10 First Class International in Foothill Ranch, said worries about airline bankruptcies and airport security also contributed to the downturn.

"The 30% drop we've seen since 2000 is mostly the result of the inconvenience of flying," Sedgwick said. About 90% of First Class Travel's business is corporate.

Navigant International retained its No. 1 spot for a sixth year, with $125 million in revenue, a 5% increase.

"We had a reasonably profitable year," said David Buskirk, regional vice president of Navigant. Buskirk said the agency was able to sign on new clients as well as control costs.

The top four agencies-Navigant, American Express One, Boeing Travel Management Co. and TraveLeaders-accounted for 54% of the total revenue for the companies on this year's list.

Ongoing turmoil in the travel industry also meant fewer workers, with agencies reporting a 6% drop to 1,520 employees last year. The figure includes two estimates.

The biggest drop was at Irvine-based Uniglobe Travel USA, which cut its OC employee count by 58% to 38 by combining local operations. The Irvine office is the U.S. headquarters for Uniglobe.

"We consolidated because of the downturn in travel," said president Malcolm Read.

Revenue and employee figures include Business Journal estimates for two agencies: No. 2 American Express in Santa Ana and No. 5 AAA Travel Agency of Southern California in Costa Mesa.

Companywide revenue at the 19 agencies grew 2% to $28.3 billion, a modest turnaround from 2001 when it plunged in the wake of Sept. 11.

Navigant was one of only five agencies to post revenue gains in 2002. The others were No. 3 Boeing, No. 7 TravelStore Inc., newcomer No. 9 WorldTravel BTI and No. 14 Nippon Express Travel USA.

TravelStore, which grew sales 114% to $30 million, did so due to acquisitions, adding four agencies since it opened its first retail location here in 2001. But the agency closed its Tustin office, consolidating those operations in Irvine. This year, TravelStore acquired Old Newport Travel of Newport Beach.

"Corporate travel has been busy," said regional director Tanya Turnbull.
Like other agencies, Turnbull said business was slow in March due to the war.
Other than TravelStore, the biggest increase in revenue by dollars came at Boeing in Huntington Beach. That agency saw its revenue jump 12% to $100 million.

Vice president of operations Marsha Landgraf-Leeg said the company "maintained a strong leisure business, gained new corporate customers and increased online booking" to generate additional business. Boeing also merged two smaller offices into the Huntington Beach operation.

Ten of the 19 agencies saw sales decrease last year. Both No. 12 Carlson Wagonlit Travel in Irvine and No. 17 The Bonneville Co. in Newport Beach saw business drop by 30%, the biggest percentage declines on the list. Close behind was Uniglobe with a 29% decline.

But at Carlson Wagonlit Travel in Huntington Beach, which had 14% lower sales, president John Dekker said corporate bookings are now holding steady, despite new challenges.

"Business still needs to be done," he said.

There was one newcomer to the list: WorldTravel BTI in Dana Point, which manages OC corporate travel accounts. WorldTravel BTI ranked No. 9 with $29 million in OC revenue.

The bottom company on the list-Carlson Wagonlit Travel in Huntington Beach-had $6.1 million in sales. That's a far cry from more robust times in 1999, when the last agency reported $12 million in sales.

To compensate for the downturn, agencies have found myriad ways to remain competitive, from consolidation and a focus on technology to partnering with other agencies and catering to niche markets.

Uniglobe is focusing on mid-size corporate accounts and using search software to help it compete with the Internet for air bookings.

And Sedgwick said First Class is using technology to provide additional service to clients. Part of that service is helping clients prepare for emergencies or disasters during their trips.

Worldview Travel Inc.'s Ricci Zukerman, whose agency had a 20% drop in business, is looking in another direction.

Worldview has partnered with a safety and security company to host a travel safety symposium slated for May 29 at the Hyatt Regency. Her aim, she said, is to teach clients about safe travel no matter where they may be headed.

Sandi Cain is a freelance writer and contributor to the Orange County Business Journal and meetings industry
publications. She specializes in hospitality, tourism and travel. Cain holds bachelorís and masterís degrees in education from Kent State University in Ohio, where she majored in social studies. A former high school teacher, she has written for niche-market sports publications in the U.S., England and Australia and formerly worked in both the printing and high-tech industries. A Cleveland, Ohio native, Cain hasbeen a resident of Laguna Beach since the late í70s. She enjoys travel, gardening, reading and spoiling her three cats.


Sandi Cain
Laguna Beach CA

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