Navigant Retains No. 1 Slot; Sales Up 10%
Internet-minded futurists might suggest that travel agencies are a thing of the past, but a continuing strong economy, burgeoning travel technology and consolidation helped Orange County’s travel agencies turn in a strong performance in the past year. Total revenue for the largest 19 agencies on the Business Journal list grew10% to $910.1 million, compared with $826.3 million those agencies posted last year. But this year, employment was down 4% to 1,128 from 1,177 a year ago. When travel giant American Express, whose figures are a Business Journal estimate, is removed from the equation, the remaining agencies on the list still showed a 10% growth in revenue to $752.1 million from $686.3 million last year.
Though total employment is down both for this year’s companies and list to list, when American Express is removed from the equation, the companies on this year’s list maintained their jobs, reporting 1,029 this year compared with 1,027 last year. The positive financial results came despite an increasingly competitive market in which agencies face pressure from online options and continuing commission cuts by the airlines,once the bread and butter of travel agents. In response, agencies have become more aggressive, with mergers and acquisitions, strategic alliances, franchising and fee-based services among the tactics employed by agencies looking for ways to remain competitive. This has led to fewer players, but has helped many agencies survive. Heading the pack again this year is Navigant International-Southwest Region, formerly known as Associated Travel/Navigant. The agency dropped the use of the Associated name Jan. 1. This is the third straight year Navigant has topped the list, though the gap between Navigant and No. 2 American Express has narrowed. Navigant posted a year-to-year gain in gross OC sales of 3%, to $160 million, while American Express is estimated to have grown sales 13% to $158 million from $140 million a year ago.
Happy About Growth
David Buskirk, president of the Southwest Region for the Englewood, Colo.-based Navigant International, said he is delighted the agency has retained the No. 1 spot in Orange County, the region’s home base. Buskirk said the company’s focus on middle-market corporate business in the $20 million-to-$30 million range for annual travel expenditures is important to the company’s overall strategy. “Huge national customers can become distracting to other customers,” he said. He also said the company has developed a new focus on leisure travel through its Internet sites: Navigantvacations.com and cruisecenter.com. “We have a built-in clientele (for the leisure market), with our corporate customers,” he said. Buskirk, who said Navigant remains bullish on the Orange County market, said the agency’s most serious problem is finding good, experienced agents. “We’re putting more emphasis than ever in recruiting. We never had to do that before,” he said. No. 2 American Express restructured its local offices a year ago to handle large corporate accounts in Irvine, middle-market accounts at its Hutton Center office in Santa Ana, and small business and retail accounts at its South Coast Plaza office in Costa Mesa. As a result of the restructuring, the agency’s staff has also been reduced by about a third, to 99 from about 150 last year.
No Downward Trend
In a reflection of the good economy, no agencies on this year’s list reported a decline in revenue, the first time that has happened in the past five years. Two agencies, however, reported flat revenue: No. 8 Carlson Wagonlit Travel in Irvine and No. 11, Newport Beach-based Bonneville Co. Lynda Lamb, vice president and general manager of Bonneville Co., said the agency chose to resign from handling travel business for the federal government, affecting both revenue and employment in the past year. Bonneville’s staff was reduced 30% to 31 after it gave up the federal contract. In employment, the agencies were more of a mixed bag: eight have fewer employees, seven have more and four reported no change. The biggest percentage growth in both revenue and employment in the past year came at the lone newcomer to this year’s list: No. 18 Newport Beach-based Business Travel, which grew its revenue 137% year-to-year, to $12.3 million, on the strength of an acquisition that also helped boost employment 88% to 15.
Brian Preston, CEO and president of Business Travel, said the company is talking to another nine agencies about merger deals. One of those, an OC agency Preston declined to name, was scheduled to be completed late last week. Other acquisition targets are in Orange County, San Diego and Denver; all have revenue in the $3 million to $11 million range, he said. Preston, who admitted his business model is similar to that of Navigant International, which grows by acquisition but allows autonomous management at the local level, said Business Travel did an industry and corporate analysis to determine the best course of action for the agency’s future.
“We determined that having a national ranking is the best position to be in to stay in the (travel) business,” he said.
As a result, the agency now has what Prestoncalls a “strong business statement” goal of attaining $150 million in revenue and a ranking among the top 40 in the country within the next two years. The agency targets corporate accounts with $300,000 to $600,000 in yearly travel expenditures. “We’re in it for the long haul,” he said. The agency posting the next biggest percentage gain in revenue,and moving up four slots on the list from No. 13 to No. 9 as a result,was Santa Ana-based World Travel Bureau, which grew its business 25% to $35 million from $28 million last year. Yet the company saw its employment drop 25% to 50 people compared to 67 a year ago.
Productivity Enhanced Tom Jackson, president of World Travel, called the anomaly a “benefit of productivity.” “We’re doing more business with fewer agents and delivering a better product with the use of the Internet, e-mail and other technology,” he said. Jackson said the agency, which his father purchased in 1938 for $150, also combined a couple of offices. “Our head count is down, but our productivity has gone straight up,” Jackson said. Conversely, at No. 10 First Class International, President Steve Sedgwick said business has been so brisk that, despite the company’s plans to hire about a dozen more people last week, they would likely need even more to accommodate the recent growth in clients. First Class saw a 13% growth in revenue to $34 million this year.
Others with big revenue gains were No. 13 Travel Connection LLC, Newport Beach, and No. 16 Laguna Hills-based Presidential Worldwide Travel LLC. Both agencies posted 23% gains, with Travel Connection growing to $23.5 million and Presidential Travel to $15.5 million. Gene Koch, CEO of Travel Connection, attributed that agency’s growth largely to the combination of agencies through acquisition. The company added Domestic World Travel and Travel Affairs International, both of Tustin, to its family of agencies last year. The two now operate together as a branch of Travel Connection. At Presidential Travel, Vice President of Operations Jay Rifkin said the agency added a client relations manager and a telemarketer who pre-qualifies potential accounts to streamline the sales effort. “We don’t go after accounts we know we can’t handle,” Rifkin said. One agency, Rosenbluth International, which ranked No. 7 last year with $44 million in gross OC sales, dropped off the list because it no longer has an OC retail location, but handles local business through its Los Angeles office. Maritz Travel, which ranked No. 11 last year, restated its 1999 figures, saying that the company previously reported incorrect numbers. As a result, though the agency saw a 6% growth in revenue to $11.4 million from $10.8 last year, the agency dropped to No. 19 this year. Sundance Travel International, Irvine, No. 3 on the list again this year, remains the largest privately owned travel agency based in OC, with $85 million in gross sales compared with $78 million last year.
Sundance recently signed a strategic alliance with Coral Gables, Fla.-based TraveLeaders that Sundance President Scott Shadrick said will give the agency a more national presence and enable it to take advantage of tour and cruise business that is a specialty of the Florida company.
National Ranking
Four of OC’s largest agencies are also ranked among the 100 largest corporate-owned agencies in the U.S. by trade publication Business Travel News: Navigant International, which ranks No. 4 in the U.S.; Boeing Travel Management Co., No. 17 nationally; Sundance International at No. 32 in the U.S. and First Class International at No. 84. I n comparison, the LA area has only three travel agencies on the Business Travel News list: LA-based Travel Store, No. 40; Cassis Travel Services at No. 58; and Gardena-based Nippon Travel Agency America, No. 72. San Diego has a lone representative on the national list, Balboa Travel, at No. 51. While most agencies contacted for this story expressed optimism for the coming year, World Travel’s Jackson drew on his almost 40 years of travel agency experience to sum up today’s market. “Sure there’s thinning of the ranks,” he said. “But there are more travelers, capacity, destinations and niche market activity and those agencies that operate like businesses will do well.” n
