News for the Hospitality Executive
Travel Agency Sales Up as They Continue to Reinvent Themselves
with New Markets, New Travel Options
|By Sandi Cain, Orange County Business Journal Staff
Orange County’s largest travel agencies saw overall revenue increase last year, mostly on the strength of leisure travel, according to this week’s Business Journal list.
The 18 largest agencies in OC by gross sales posted a 15% gain in revenue to $888.8 million last year, up from $774.8 million in 2005. That compares to a 3% gain in the previous year, when 19 agencies were on the list.
Most of the gain came from No. 2 Boeing Travel Management Co. in Huntington Beach. Boeing grew its OC gross sales 98% to $149.5 million. The bulk of Boeing’s business comes from in-house business and leisure travel for the giant aircraft manufacturer.
Excluding Boeing, the agencies posted a 6% increase in gross sales to $739.3 million.
Despite industry consolidation, the list had remained steady at 19 since 2000 until this year. Last year’s No. 16 Presidential Travel dropped off the list after decreased revenue led it to consolidate operations with another local agency.
The list includes only agencies with $10 million or more in annual revenue. The other drop off, last year’s No. 19 Back Bay Travel Inc. in Costa Mesa, didn’t qualify.
The list ranks the largest travel agencies by 12-month sales at their OC offices. That method presents a skewed picture for mammoth operations like American Express, which maintains only a small presence in OC despite being the largest corporate travel management company in the U.S. American Express does not report OC sales separately from its Los Angeles operations.
Thirteen agencies on the list have 50% or more of their business in corporate travel.
Figures for four agencies—American Express, AAA of Southern California, Adelman Travel Group and BCD Travel—are Business Journal estimates.
The AAA estimate is based on information in the company’s annual report to members. The rest of the estimates are based on other publicly available information. Excluding estimates and Boeing, the remaining 13 agencies posted a 5% increase in revenue from a year earlier.
Of the agencies that provided revenue figures for 2006, nine reported an increase, three reported a decrease and two reported no change.
The Santa Ana office of Carlson Wagonlit Travel, a unit of Minneapolis-based Carlson Cos., was No. 1 on the list with $187.5 million in annual sales, up 4% from last year. Carlson Wagonlit took the top spot last year after buying former No. 1 TQ3 Navigant, which also was created through a series of mergers.
Buying TQ3 Navigant has been a positive move for the company, said David Buskirk, senior vice president of the Western region for Carlson.
“It doubled Carlson Wagonlit Travel’s size in North America,” he said.
TQ3 Navigant’s management team remained the same after the deal and most clients have stayed on board, Buskirk said.
“Our transactions are up over last year,” he said.
Two other Carlson Wagonlit travel agencies on the list operate under the Carlson Franchise Group of Carlson Leisure Travel Services, a different unit of parent Carlson Cos. The leisure and business divisions cater to different businesses, so there’s rarely confusion among clients, Buskirk said.
Other big gainers on the list included Santa Ana’s Worldview Travel, up 33%, and Carlson Wagonlit in Huntington Beach, up 17%.
The three agencies that had fewer sales last year posted only small declines. TraveLeaders in Irvine was down 5%, Brea’s Dorel Group dropped 2% and Santa Ana’s World Travel Bureau declined a mere 1%.
No. 16 Boulevards of Travel in Newport Beach is the only newcomer this year, with $12 million in annual sales. Roughly 40% of the business is corporate and 35% is leisure, owner Barbara Boatman said.
“We’ve had the most growth in leisure travel,” Boatman said.
The agency is upbeat about 2008, with some groups booking well into next year, she said.
“Family travel is a big market now,” she said.
Several agencies attributed their recent growth to a strong leisure travel market.
“Leisure travel is going gangbusters,” said Sue Brunsmann, general manager for TravelStore in Irvine, which specializes in luxury travel.
Clients are tired of staying close to home and are willing to pay higher prices and accept unfavorable exchange rates to have the summer vacation they want, Brunsmann said.
She also said clients are returning to travel agencies after booking travel online in order to get personalized service and have someone to call if a problem arises during the trip.
Another growing sector for leisure travel agencies is river cruising.
“It’s a very high-value form of travel and relatively inexpensive,” said George Delanoy, president of Dorel Group.
River cruises generally offer all-inclusive pricing that includes sightseeing and walking tours in city ports almost daily.
“It’s a fast-growing segment for Europe, the U.S. and China,” said Tom Jackson, president of World Travel Bureau.
Many agencies turned to selling cruises when airlines stopped paying commissions on air ticket sales. Since then, they have continued to reinvent themselves by embracing new markets, new travel options and new business models.
“We try to be on or close to the cutting edge of trends,” Jackson said.
Most recently, that means qualifying to sell space travel. World Travel Bureau, Worldview Travel and Coastline Travel in Garden Grove were among the California agencies selected by Virgin Galactic to book seats on Virgin’s SpaceShipTwo.
The fledgling venture by Virgin Atlantic’s Richard Branson will take passengers on a two-hour space flight beginning in 2009. The price tag: a cool $200,000—in advance.
“It’s for people who are looking for something different,” said Ricci Zukerman, president of Worldview Travel. “They’re not really going anywhere.”
Zukerman said agencies have to be licensed by Virgin Galactic to sell the packages. She hired a former commercial pilot as the agency’s space travel specialist.
Jackson said he saw another opportunity in space travel.
“Once it’s proven safe, Virgin Galactic may look at doing point-to-point travel via space,” he said. For OC travelers, that might mean flying between L.A. and Sydney in less time than it takes to drive to LAX at rush hour.
Zukerman launched another endeavor in the past year, creating a separate travel management department to assist smaller agencies that were struggling to stay afloat. The smaller agencies pay Worldview a management fee and continue to operate under their own names.
“It helps grow our business and helps others stay afloat,” Zukerman said.
On the corporate side, Buskirk noted a recent trend among clients asking for global travel management deals as their businesses expand overseas. “It’s terrific to be able to handle that now,” he said.
U.S. travel agency air sales alone totaled $77.9 billion last year, up 10% from 2005, according to Arlington, Va.-based Airline Reporting Corp., which provides data for airlines, travel agencies and corporate travel departments.
According to the American Society of Travel Agents, travel agencies
sell about half of all airline tickets.
|Also See:||Orange County's Travel Agencies Continue to Suffer from a Downturn in Travel / Sandi Cain / May 2003|
|Orange County Travel Agencies Bear Brunt Last Week, Waiting For Fallout / Sandi Cain / Sept 2001|
|A Throwback to the Past - the Traditional Travel Agent Making a Comeback / July 2007|