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Travel Agencies Post 6% Gain, Carried By Luxury, Corporate

Orange County’s largest travel agencies posted overall gains in revenue last year due to a continued demand for leisure services, according to this week’s Business Journal list.

The list ranks the 20 largest agencies in OC by 12-month sales at their OC offices. Overall, the 20 on this year’s list posted a 6% gain in 2007 revenue to $814 million, up from the $765 million they posted in 2006.

Boeing Travel Management Co. in Hunting-ton Beach took over the No. 1 slot after posting a 15% increase in OC revenue to $171.7 million, making it the biggest gainer on the list by dollars. That gain also displaced longtime No. 1 agency Carlson Wagonlit Travel of Santa Ana, a unit of Minneapolis-based Carlson Cos.

Carlson revised its gross sales figure for 2006 to $69.7 million from the $187.5 million that was reported a year ago. The revision was due to a change in the reporting system used by Carlson, which acquired its Santa Ana office,then known as TQ3 Navigant,in August 2006. Navigant itself was formerly known as Associated Travel until it was acquired by Navigant in 1998.

Carlson should have actually been ranked No. 3 last year.

The three other Carlson travel agencies on the list operate under the Carlson Franchise Group of Carlson Leisure Travel Services, a different unit of parent Carlson. The two divisions cater to different businesses and do not conflict.

Now No. 1, Boeing’s growth came partly on the strength of the company’s increasing global presence that resulted in more travel spending for the company.

“Some of our clients also went global,” said Isabelle Donovan, vice president of global operations and account management.

The company expanded to Russia and is adding partnerships in Asia this year.

Figures for four agencies,AAA Travel Agency of Southern California, TraveLeaders Group Inc., BCD Travel and American Express Travel,are Business Journal estimates. The estimates are based on publicly available information. Florida-based TraveLeaders in March was acquired by Minneapolis-based Travel Acquisitions Group and now is a subsidiary of its Travel Franchise Group.

Excluding estimates, the remaining 16 agencies posted a 10% increase in gross sales to $639.6 million. Counting only OC sales skews the data for large operations like American Express, which leads the corporate travel industry nationwide, but has only a small presence here. American Express, like other national companies, does not report OC sales separately from other Southern California operations.

Employment for the agencies on this year’s list was down by 1% to 3,880 employees. No. 2 Carlson Wagonlit Santa Ana had the biggest reduction, cutting its staff from 67 to 40. No. 5 TravelStore Inc. increased its employees by 29% to bring the total to 53.

Though the biggest growth in revenue came from leisure business, 10 of the 14 agencies that reported their business breakdown get 50% or more of their revenue from corporate travel.

The other four,Brea-based Dorel Group, Santa Ana-based Worldview Travel Manage-ment Co., World Travel Bureau Inc. in Santa Ana and Boulevards of Travel Inc. in Newport Beach,rely mainly on leisure travel.

Of the agencies that reported revenue, 14 reported increases and two,First Class International in Foothill Ranch and Carlson Wagonlit Travel in Irvine,reported drops. No. 12 First Class counts about 90% of its business in the corporate travel sector; No. 19 Carlson Wagonlit Irvine has 70% in the corporate market.

The biggest percentage gainer on the list was World Travel Bureau, up 38% to $26.5 million in 2007. World Travel Bureau primarily is a leisure agency, with 69% of its business from that sector.

Tom Jackson, president of World Travel, said part of the increase was due to cruise bookings and the agency’s first reservation for a Virgin Galactic space flight. Other business came from clients weary of booking on the Internet only to find little assistance when problems arise.

“We don’t represent the airline companies; we represent the customer,” Jackson said.

He said whatever gains World Travel had in 2007 may be offset by a slowdown this year.

“We’re considerably off last year’s (performance) for the first half of 2008,” he said. “It may be worse by the end of the year.”


Big Gainers

Other big gainers on the list included Worldview Travel Management, up 25%, and Carlson Wagonlit Travel Costa Mesa, up 25%.

“Any time things become more complicated, we have more clients,” said Worldview President Ricci Zukerman.

Baggage fees, grounded planes, schedule interruptions and surcharges create confusion that sends people back to travel agents, she said.

Worldview’s gains came in part from its travel management department that assists smaller agencies, but also from increases in luxury travel.

“There were more private plane charters and private yacht charters than any other year, but we’ve lost some of the lower-end business,” Zukerman said. “The super rich don’t care (about costs).”

Like Jackson, Zukerman said this year is a much more difficult one for sales.

Carlson Wagonlit Irvine was off 8% to $22 million last year, but Chief Executive Linda McIntosh said business is back up again this year.

“(Clients) need to travel but grumble about being nickel and dimed to death,” she said.

Total 2007 travel agencies sales through Arlington, Va.-based Airlines Reporting Corp. were about $80 billion for 2007, up 5% from 2006. But the number of transactions was down slightly,a reflection of fares that began to rise late last year.

Airline Reporting transactions include only airline ticket sales, but it is the largest single source for overall travel agency sales.

According to Allan Mut & #233;n, the Airline Reporting director of strategic communications, travel agencies in general attract higher-fare business, while low-fare travel is more frequently booked online.

This year, fuel surcharges may end up being the least of travelers’ worries. Recent moves by government agencies and airlines may drive fares even higher.

The U.S. Department of Transportation this summer decided to allow airports to impose higher landing fees for aircraft using the facilities during peak hours. Some airlines also are moving toward premium pricing for seats on highly desirable flights and adding high fees for frequent flyer upgrades.

“Many owners this year are saying if this year is flat, we’ll be lucky,” Zukerman said. “The business is there, but you have to work harder to (make) the same amount.”

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