Orange County’s largest travel agencies saw revenue again climb last year, bolstered in part by a strong leisure travel market, according to this week’s Business Journal list of travel agencies.
The 19 largest agencies in OC by gross sales posted a 3% gain in revenue to $787 million last year, versus a year earlier. Though that was below the 9% growth a year earlier, the result still was cause for optimism, as activity also has been strong in 2006.
“We had a record year in 2005 and we were beating it for this year,” said George Delanoy, president of No. 17 The Dorel Group in Brea.
That was until the early August discovery of a possible terrorist plot and a subsequent round of more stringent airport security restrictions. Because the security measures focus primarily on carry-on items, they’re likely to create more consternation among business travelers than leisure travelers.
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Delanoy attributed his agency’s 19% growth in revenue to $11.4 million last year to an emphasis on leisure travel.
“That’s where the action is, and that’s where most of the growth was,” he said.
Thirteen agencies on the list have 50% or more of their business in corporate travel. The list ranks the largest travel agencies operating here by 12-month sales at their OC offices.
Figures for two agencies,No. 3 AAA Travel Agency of Southern California and No. 8 BCD Travel,are Business Journal estimates.
The AAA Travel estimate is based on information in the company’s annual report to members. BCD Travel’s estimate is based on industry trends.
Excluding estimates, the remaining 17 agencies posted a 4% increase in revenue from a year earlier.
Of the agencies that provided revenue for 2005, 11 reported an increase, three reported a decrease and three reported no change.
Total U.S. travel agency revenue was $70.5 billion last year, up 7% from a year earlier, according to Arlington, Va.-based Airline Reporting Corp., which provides data for airlines, travel agencies and corporate travel departments.
Industry consolidation and the move of some small agencies to home-based operations accounted for the bulk of a 5% decline in U.S. travel agencies to 22,043 last year.
Carlson Wagonlit Travel, a unit of Minneapolis-based Carlson Cos., was No. 1 on the list with $180 million in annual sales, up 3% from last year. Carlson Wagonlit took the top spot after buying former No. 1 TQ3 Navigant.
“We’re now second to American Express in North America,” said David Buskirk, president of the Western region for Carlson Wagonlit.
Buskirk said Carlson Wagonlit traditionally focused on large companies in the corporate market, while TQ3 Navigant’s business is primarily from midsize companies.
“Carlson brings a lot to the table with operations in 151 countries,” Buskirk said. “(TQ3 Navigant) struggled a little in that (international) area.”
Two other Carlson Wagonlit travel agencies on the list,in Irvine and Huntington Beach,operate under the Carlson Franchise Group of Carlson Leisure Travel Services, a different unit of parent Carlson Cos.
In another restructuring, BCD Travel changed its name after Dutch parent company BCD Holdings NV ended its partnership with Britain’s Hogg Robinson in January and reorganized its holdings.
The biggest percentage gain on the list was posted by No. 11 American Express Travel in Orange. American Express, which restructured its travel divisions during the past several years, reported a 27% increase in revenue to $25.7 million.
Other big gainers included Uniglobe Travel USA LLC in Irvine, which moved up to a tie for No. 4 on 20% growth to $60 million.
No. 16 Santa Ana-based Presidential Worldwide Travel LLC also recorded a 20% rise in revenue during the past year. Presidential Worldwide reported $13.4 million in revenue.
Cruise ship bookings have been strong during the past few years.
“People are taking longer cruises and booking bigger cabins, so our average cruise sale (amount) is high,” said Dorel’s Delanoy.
Some 60% of travelers said they are interested in taking a cruise, up from 46% last year, according to the Business Travel Monitor published by Orlando marketing firm Yesawich, Pepperdine, Brown & Russell. Only 33% of those surveyed said they had booked a cruise.
After three consecutive years of declining revenue, No. 13 World Travel Bureau Inc. in Santa Ana posted a 7% increase to $19 million last year.
“Business isn’t over the top, but it’s good,” said Tom Jackson, president of World Travel.
Jackson attributed some of the increase to cruise business, family vacations and adventure travel. Yesawich, Pepperdine said that 80% of leisure travelers have gone on travel with extended family or friends.
This year’s business is similar to 2005, Jackson said, with a slight uptick in customers coming back to the agency after trying online booking.
Despite the growth of travel Web sites, Yesawich, Pepperdine said about two-thirds of those using the Internet said they can’t find what they want online.
“Travel agents are selling 140% of what they were (selling) three years ago,” said Peter Yesawich, a partner at the research firm, at a spring conference in Anaheim.
The biggest sales decline was at No. 14 Nippon Express Travel USA in La Palma, which saw revenue drop 27% to $16.3 million.
The decline largely was related to factors the office couldn’t control, said marketing manager Richard Mizuno.
Nippon lost about $1 million in revenue from reduced business from an account operated through the Japanese government.
And the move of some companies, such as Nissan Motor Co., to other parts of the U.S. has resulted in fewer corporate travelers to California, Mizuno said.
“Our offices on the coasts are not as healthy as the ones in middle America,” he said.
On the leisure side, Nippon was hit by declining international visitor numbers. Mizuno said Nippon’s offices in Japan report more people traveling to Pacific Rim countries than the U.S.
Excluding estimates, the only other agencies reporting reduced revenue last year were No. 12 Carlson Wagonlit Travel/ITS in Irvine, down 4%, and No. 15 Baker Travel Inc., down 13% to $14 million.
Both corporate and leisure travel were on the upswing in 2005, a trend that has continued into this summer.
Whether or not the recently foiled terrorist plan will have an impact on agency or other travel-related businesses in OC remains to be seen.
On the corporate side, Buskirk said he doubted that new carry-on restrictions or threats would prompt a slowdown in corporate travel again.
“Business travel is burned in wood,” he said. “The direction of the economy is more significant.”
But he said it would slow the business travelers themselves, who often travel only with carry-on luggage.
“I had to check a bag to keep a new can of shaving cream,” Buskirk said.
No. 7 TravelStore Inc. in Irvine did a lot of rebooking in the first two days after the terrorist threat level was raised, largely due to cancelled flights,not cancelled travel, said general manager Sue Brunsman.
While leisure travelers often have more discretion in whether or not to fly, Delanoy of Dorel said it might be some time before any fallout is evident.
“(Vacation) cruises and tours are already paid for,” he said. “The issue is whether (those travelers) will be cancelling.”
At least in the first few days, Delanoy had no cancellations for either business or leisure travel and wasn’t worried about the possibility.
“You can’t run a business based on something that could happen,” he said.
