The business model is based on such hard-to-acquire expertise. "We try to know what the customer is going to need and do it before they ask us for it," says Spiegel. "We don't sit back as order takers ready to write tickets."
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THE PIGGYBACKER
Company: Travelogue Inc.
Location: Washington, D.C.
Number of employees: 150
CEO: Osman Siddique
Strategy: Boost productivity and service through new distribution technology
ATMs -- airline ticketing machines, in this case -- "just won't work," says one travel agent. "The one thing agents can't afford now is one more bite out of their ever-decreasing commissions." Osman Siddique begs to differ. His agency happily pays a company called Docunet $4 for every ticket printed on one of Docunet's 50 (and soon to be 150) remote printers in the capital region.
Until recently, Travelogue was an ordinary successful agency, serving a mix of corporate and leisure clients from 42 retail offices and 20 on-site placements. Then along came Docunet, announcing its intention to install automated ticketing machines in corporate offices, office-building lobbies, even Giant food stores. The $4 fee charged by the company would be less than delivery by Federal Express and not much more than the cost of delivery by regular mail. It would also be one heck of a lot quicker and more flexible. Siddique signed up.
Today, Travelogue sells leisure-time travel over the phone but allows clients to pick up their tickets at a nearby Docunet machine anytime of the day or night. Employees such as David Coffman are stationed in the offices of large corporate clients with a Docunet machine and custom software at their disposal. "A lot of travel agents do see this technology as a precursor to their demise," says a Docunet spokesperson.
Not Siddique -- and not Coffman, who works out of the offices of Fila USA, the big sportswear company. "Fila does a lot of last-minute and after-hours work," Coffman explains, which would make a traditional ticketing system too cumbersome to use. Coffman alone handles an annual travel volume of more than $3 million, enough to keep three conventional agents busy. With the machine, he says, the agent becomes less of a service deliverer and more of a consultant, kept on retainer to ensure quality control and generate data such as cost reports.
The business model: use technology not only to boost productivity but to increase flexibility. A ticket that's printed at the last minute can be changed right up to the last minute, without messy paperwork. Both Siddique and Docunet confidently predict that this type of ATM will one day be as ubiquitous as the other kind we know so well.
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THE BUYER'S AGENT
Company: Premier Travel Partners
Location: Cleveland
Number of employees: 152
CEO: H. Gene Nau
Strategy: Collect revenues from a different customer
Funny thing about travel agents: like real estate agents, they're expected to serve both buyer and seller, but they're traditionally paid entirely by the seller. Conflict of interest? Customers sometimes wonder, particularly because agents can earn hefty bonuses by steering passengers to particular airlines. Still, agents were never willing to charge travelers for their services as long as other agents were delivering them free -- until the commission cap. "I was always considered an amusing eccentric," says industry consultant and longtime advocate of fee-for-service agenting Robert Joselyn, until the arrival of the cap. "That day I was a prophet by dinnertime."
In the past year, many agencies have begun charging fees for some of their services. Nearly all have occupied a sort of middle ground, assessing modest service charges while still collecting commissions from suppliers. One exception to that rule is Premier Travel Partners, an agency that has created a new business model by redefining who its customer is.
Premier, which serves mainly corporate clients, gives clients all the commissions (and most of the overrides) it earns on their accounts. The client pays for the cost of an on-site agent. In addition, some clients pay separate fees for every travel transaction, while others merely pay Premier a fixed monthly rate. The result: the agency's revenues come from the client, not the supplier.
How does Premier set the fees? When negotiating terms with a client, Premier opens its books to show what its costs are. "We say, 'Look, we're not in the travel business to lose money, but we're not out to gouge you,' " says chief financial officer Steve Goden. If profits on an account turn out to be too small, Premier will raise the fees. And it will lower them if earnings are bigger than expected. Customers can audit Premier's books anytime they want to. Some have.
Premier now offers services such as sophisticated management reports and information-systems work that it couldn't offer when the customer got everything "free." Customers, says Goden, are happy with the setup. "Clients finally feel that the travel agent is working for them, not for the airlines or the hotel companies. The umbilical cord between the client and the travel agent is tight, and it's our responsibility to focus on serving the account as best we can."
