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Posted Jul 26, 2011
Most every agency engages in the practice of allowing more than an average of 13.5 days for a corporate travel customer to pay for tickets issued. If the tickets are issued on a credit card, however, ARC (Airlines Reporting Corporation) does not draft your agency bank account; instead, the airline collects directly from the credit card company. This cash flow benefit is significant in an industry which operates on such a slim profit margin. And there is even more good news! Travel agents can deduct the commission derived from transactions directly from the authorized ARC draft amount. In fact, some agencies whose accounts are nearly 100 percent credit card do not have their accounts drafted at all; they receive a check every week for the airline commissions earned.
Posted Jul 6, 2011
With all the rhetoric about which technology is best, fastest, state of the art, preferred, suggested, recommended, demanded, I believe we have all been focusing on the wrong thing in our quest to improve sales and profitability for the industry.
Posted Jul 1, 2011
The Airline Reporting Corporation tracks airline ticket sales for the 14,500 travel agencies (both online and offline) in the US. In May, these agencies sold $7.4 billion in air tickets, up 5.92 percent year over year.
In the first quarter of 2011, online agencies represented 23 percent of all airline tickets sold in the US. The online category includes Expedia, Orbitz, Travelocity, Priceline, Hotwire and other pure play online agencies. The mega category including travel management companies (which include Amex, CWT, BCD, HRG, Maritz, Omega and CWT/Sato) are responsible for 27 percent and the remaining 14,480+ agencies make up the other 50 percent of tickets sold. Sales were up 10 percent overall for the 1st quarter year over year.
Posted Apr 22, 2011
Holy cow, can this really be happening? At The Beat Live conference in Chicago last year, a comment was made that the corporate travel industry could be at a tipping point in regards to the future of distribution. Well folks I'm here to tell you, we've not only hit the tipping point but the wall is starting to crack.
Posted Apr 19, 2011
I agree with the experts that a shakeout is taking place due to the current economic downturn. If you have not positioned your agency at this time either to be a part of the larger travel organizations or to become a "boutique," then you might want to start thinking about your strategies for the future. Your key starting point is determining your agency's net worth.
There are four critical areas that comprise an adequate and accurate agency valuation plan -
operations/resource management,
market position/agency image,
financial management, and
business history
Posted Apr 3, 2011
Acquisition is the fastest way to penetrate a market and minimize stress on employees and systems. It can also improve operational efficiency, repaying acquisition costs and achieving higher operating profits while enhancing profitability by eliminating the competition.
Successful acquisitions require identifying the right targets and integrating the two businesses. American Express has long used acquisition as the preferred method of sales growth. A well-executed acquisition is more cost effective and financially beneficial to the acquirer than internal sales growth.
Posted Apr 1, 2011
When I was at the sharp end of the travel management company business, I was a huge fan of employing clever people and, when possible, rewarding them for success in saving money for both my clients and my company. I undertook quite a bit of research which confirmed to me that a good agent could bring an annual savings ROI of between 300 percent and 500 percent. Only trouble was that people were so focussed on taking any manpower cost out that they did not delve into the deeper implications of doing so.
Posted Mar 31, 2011
You are a $5 million airline ticket sales agency. Your sales force has been hard at work and has just landed a new business account. The account will bring in $400,000 of new business. In return for this share of business, the customer has told you that he is willing to pay you only 7 percent of sales in fees. Will you be able to make a profit on this new chunk of business or will you incur a considerable loss?
Posted Feb 10, 2011
Whatever will be the outcome of The Great GDS Debate, as I have been labeling it on my hard drive since 2003 (it's a big folder), the last few months of legal and regulatory wrangling between American Airlines and the global distribution system providers has produced quite a few tidbits that are educating us about contractual specifics between the companies. Between the information from the now-tabled AA-Sabre case and also a Nov. 17 Department of Transportation filing that we somehow missed at the time, I, for one, feel better educated about who pays what to whom and other market details. Of course, all that could change as the carriers and GDSs negotiate new terms, but here's what I've learned thus far.
Posted Jan 31, 2011
It must happen to a greater or lesser extent if American Airlines creates a model that succeeds and then gets rolled out across the industry. The only way that travel management companies will be able to give their customers what they want will be to direct connect with every key supplier and, as such, become mini specialist global distribution system in their own right. It will cost them a lot in time, resource and money despite what some AA loyalists say and you can bet your bottom dollar they will want it back with interest.
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