Travel Agencies Gain Strength Through Mergers
With competition in ticket sales flying high between the airline industry and Internet companies, travel agencies look for alternative solutions to maintain a long-term business plan.
In an unusual alliance, the alternative solution comes from merging with another travel agency.
Individual travel agencies merge with other agencies for various reasons, including retirement, reducing workloads, or gaining additional support from another agency.
Tim Smith, president of San Diego Travel Group, said risk is greater today since the value and revenues of a travel agency are significantly less.
“Mergers is a business strategy for growing a business,” Smith said. “By combining agencies together, it’ll point to more profits in the long run.”
In the past two years, San Diego Travel Group acquired Chula Vista-based Carefree Travel in January 1999 and San Diego-based Tony’s Travel in January 2000. Collectively, San Diego Travel Group has 12 retail locations and seven corporate on-site locations in San Diego County.
– Reputation Carries
Weight In Acquisitions
Smith said his agency looks for agencies with presence in their local communities. The main idea is seeking out good travel agents rather than acquiring business accounts of another agency.
“An agency’s reputation in a community is a potent weapon,” Smith said. “People start to look for an agency’s favorable reputation before coming in to ask travel questions.”
He said the travel agency industry is and will always be a service industry. People contact agents to bring depth, diversification and experience to their lives rather than contacting airlines and Internet companies directly for competitive ticket prices.
As an example, Smith said if a person wants to travel to the Swiss Alps for a skiing trip, then the vacationer may benefit from contacting a travel agent who had the experience of skiing there before.
“Travel agents are highly intelligent people who are passionate about traveling,” Smith said. “An agency is a collection of travel agents who can help a person plan and arrange an important trip.”
Escondido-based Anderson Travel and Cruises has also acquired a few travel agencies in San Diego County. According to Brad Anderson, president of the agency, Anderson Travel acquired six agencies in the past 12 months.
– Mergers Add Depth
And Business Value
“An agency can’t survive if you have all the resources in one place,” Anderson said. “By merging with another agency, it increases business value to the customers and agents.”
Some of the travel agencies acquired included Great Escape of La Mesa, World Famous Travel & Tours of Point Loma, and Star Travel of Carlsbad.
Anderson said mergers allow more businesses to find success when they’re working together. By merging, the acquired agency can receive higher pay for employees, better purchasing power, better employee training and better customer service.
Anderson pointed out that in most mom-and-pop travel agencies, owners have to do everything, including marketing, accounting, administration and even being the janitor.
“All this work can be very exhausting and one can never get a break,” Anderson said. “We offer a support system for travel agents to make their lives easier.
“It’s a way for all of us to win.”