Most agencies adapting quickly to keep their businesses alive

History has shown that major travel disrupters, such as 9/11, will force at least some agencies to close. In terms of impact on the industry, Covid-19 is expected to be nine times worse than 9/11, according to the U.S. Travel Association, but agency closures have not yet begun in great numbers.

Thus far, most agencies closing are those operated by hobbyists; owners who have been considering retirement; or, in some cases, very new advisors. Many agencies remain open and are weathering the storm well, consortia heads have reported.

Some trends in the agency community have begun to emerge as a result of the crisis. In an encouraging sign, new-to-the-industry prospects are still interested in starting careers in travel. Some small-to-midsize agencies have formed a coalition that will benefit from their collective size and volume. And host agencies are receiving inquiries from brick-and-mortar agents looking to affiliate to cut down on operating costs.

Jackie Friedman, president of Nexion Travel Group, said, “Nexion was born 25 years ago in response to the airline commission caps that really changed, for many agencies, the compensation model, and it forced a lot of them to close their brick-and-mortar agencies and move home.

“So models like Nexion emerged, and it’s very interesting that 25 years later, we’re seeing a similar trend,” she said.

Most intend to stay open

Consortia heads, including John Werner, president and COO of the MAST Travel Network, reported that members remain resilient. While Werner does anticipate some agency closures going forward as well as a move from storefront spaces to homes, so far his members remain in business.

“A lot of people are definitely survivors,” he said.

Mike Estill, COO of the Western Association of Travel Agencies (Westa), reported a similar attitude among members.
“I can’t think of a single Westa agency that has closed because of the pandemic,” Estill said. “This has pushed a couple off the brick-and-mortar/home-based fence.”

Westa’s brick-and-mortar agencies have been “weathering the storm pretty well,” said Estill, who offered kudos to ASTA and fellow consortia for supporting agencies in understanding federal aid sources.

Westa agencies were also helped by the consortium’s override/profit share payout, Estill said. The year ends on March 31, and it typically takes a month to process members’ payouts. But in light of the pandemic, that timeline was accelerated to a week to get checks in agency owners’ hands faster.

Interest from new entrants

Despite the pandemic, travel agencies are still seeing interest from new entrants.

From March to mid-April, Friedman said, Nexion had 70 agencies close, most of which were not particularly productive. But over the same period, the host added 75 agencies. According to Friedman, while the industry is largely paused, many are viewing it as a good time to open a travel business and train.

Elisa Foley, vice president of operations at Tzell Travel Group, is also seeing interest from several parties, including both new-to-the-industry prospects and established advisors, especially those who weren’t previously aligned with a bigger agency but are now interested in the operational support and preferred supplier arrangements.

“Obviously, it’s tough right now and has been tough the past couple of months,” Foley said. “But in terms of life-enhancing changes, there are people who are like, ‘Hey, life’s short, I want to get in the travel business,’ and that’s encouraging.”

Host agencies have also instituted measures to help ICs. For instance, Avoya Travel has waived its monthly fees ($49 for low producers; higher producers may have the fee waived) through May and has created Avoya Cares, a team of accountants and lawyers to answer members’ questions about aid sources, according to co-founder Van Anderson. Like others, Avoya has also onboarded new independent agencies.

“The entrepreneurial spirit in America, and really everywhere, is bright,” Anderson said. “Everybody wants to … put our masks on and get back to work.”

Agencies band together

While turning to a host agency is a viable plan for some, that’s not a path Helen Papa, owner of TBH Travel in Dix Hills, N.Y., saw for herself. The Virtuoso agency has six ICs.

While TBH has been grappling with changes, cancellations and changing supplier policies, Papa has been working on an idea she’s thought about for several years.

“We have spoken to some other like-minded agencies, other owners, and just in the last two months they’ve started projecting that by the end of the summer they’d be out of business,” Papa said.

So she has banded together with several other agency owners and formed a coalition to help members with anything from marketing to administrative support. 

Coalition members will be able to participate in opportunities based on what they need. It’s also a place where members can turn for help and business advice. The coalition is still in development, but Papa said she believes it will help some agencies survive the pandemic.

Don and Karen Wood, the owners of Gold Key Travel in Longmont, Colo., were ready to retire and sell their agency this year. “And then March hit, and then everything changed,” Don Wood said.

Matching buyers, sellers

P. Jason King Associates is beefing up its services to help agencies and travel management companies interested in buying or selling. The company recently brought on longtime industry executive Steve Gorga as its executive vice president to further develop its acquisitions and mergers division.

Gorga is working with agencies, suppliers and venture capitalists on its Travel Matchmakers service. While Gorga said the venture is still in its early stages, he’s seen interest from large travel management companies down to small agencies on both the buy and sell sides. That’s not uncommon during difficult periods for the industry.

“It’s always an opportunity for mergers and acquisitions at this time as well as companies willing to invest further,” he said. 

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