Travel Survivor

Travel Survivor

Tourism by Jean Gruss | Editor/Lee-Collier

Industries going through wrenching change can learn from the travel-agent business. A survivor in Naples tells how she adapted.

Do travel agents exist anymore?

It's hard to think of any industry that's been as hard hit by forces out of its control. Internet travel booking, the terror attacks of 9/11 and the elimination of airline commissions are just three factors that have put thousands of travel agencies out of business.

Wilma Boyd is one of the survivors. Her company, Preferred Travel of Naples, is on track to book $20 million worth of travel business this year.

How Boyd survived and even thrived over the last decade holds lessons for many businesses affected by rapid shifts in their industry, such as homebuilding, media and health care.

The veteran of the travel business has navigated the rough times by not being afraid to change her business plan in the face of daunting odds and aggressively buying out her competitors when the opportunity arose. She also created a deep pool of goodwill with her tireless charitable endeavors, endearing herself to high-net-worth customers who share the same interests.

The terror attacks of 9/11 presented Boyd with her toughest challenge. Bookings fell 40% virtually overnight from $20 million to $12 million just as she had bought out her longtime business partner and acquired a rival firm within weeks of the disaster.

When Boyd started her Naples agency in the early 1980s, there were 64 travel agencies in town. Shortly before 9/11, there were 32. Today there are 12. "It took until now to get bookings back to $20 million," she says.

Mrs. Pennsylvania to TWA

Boyd got into the business when travel and glamour were synonymous.

Boyd, who won the Mrs. Pennsylvania pageant in 1958, was filming a television commercial when she caught the eye of a Trans World Airlines executive. He hired Boyd to recruit flight attendants for the fast-growing airline.

Airline travel was a glamorous affair back then and Boyd could be choosy. Flight attendants had to be between 5'2" and 5'9" tall, for example. "I would see 60 applicants in one day," she recalls. Looking back, she says the experience was invaluable because it sharpened the hiring, training and motivating skills she would later use to build her businesses.

Because so few candidates met TWA's standards (half the candidates failed on dress alone), Boyd created a special school in Pittsburgh to train them for a successful career. The technical school trained mostly women for jobs in the airline, hotel and car-rental industries. By the time she sold the Boyd School in 1983, it had 1,400 students. The school, now part of the Pittsburgh Technical Institute, still bears her name.

Meanwhile, Boyd also owned a successful corporate-travel business that catered to such giants as Alcoa and Gulf Oil, which she also sold at the same time as the school.

Preferred in Naples

By the time Boyd moved to Naples in 1983 because of her husband's health, she was ready to slow down and write a book about the business. She wrote "Travel Agent," a how-to book that has been used in classrooms as a textbook.

But as word got around about her background, Naples businessman Earl Hodges encouraged her to start a new travel agency and offered to be her partner. She accepted and started a small agency with one full-time employee and another part-time person.

Back then, there were no agencies in Naples catering to business travel and Boyd immediately saw the opportunity. Her first account would turn out to be a big one: Health Management Associates. HMA now owns and operates 61 hospitals and reported $4.2 billion in revenues last year.

Corporate travel was a lucrative business because airlines paid fat commissions, usually 10% on every ticket a travel agent issued. "They were truly our partners," Boyd says.

But as airline deregulation and the Internet followed, airlines began to cut commissions down to zero. "We saw that coming," Boyd says.

To make up some of the lost revenue, she began adding a $30 charge for every ticket. That didn't sit well with some corporate customers, who decided they could do just as good a job booking airline seats using the Internet.

Others, however, saw value in Boyd's round-the-clock customer service. For example, two employees are always on duty at night to take calls from stranded customers. They have direct access to all airlines' reservation systems and can reroute passengers. That means customers don't have to stand in line or wait on hold on the phone to get to their destinations.

Still, Boyd saw the need to shift her business model to target the high-net-worth leisure customer as corporations tightened their travel budgets. In the 1980s and 1990s, 60% of Boyd's sales came from corporate customers. Today, that's down to 20%.

Leisure shift

The growth of the Internet combined with the dwindling commissions on airline tickets forced Boyd to look for other sources of revenue. The travel-agency business is generally commission-driven, where vendors such as cruise lines, hotels and tour companies pay agents 10% to 15% commissions for booking customers.

Cruise lines, hotels and tour companies didn't follow airlines' lead in cutting commissions. They still depend on travel agents to drive the bulk of customers, rewarding the best agents with free trips.

That doesn't mean tour companies haven't ventured out on the Internet too. For example, luxury tour operator Abercrombie & Kent takes reservations directly from customers but prefer to work with travel agents, Boyd says. "It's cheaper for them to pay us 10%," she says.

Focusing on the high-net-worth market in Naples was a no-brainer. The city has the highest concentration of retired Fortune 500 CEOs in the world. These customers demand first-class service and are willing to pay for it, even in slow economies. "Our clients don't depend on market swings," Boyd says.

A few weeks ago, for example, a couple paid $102,000 for an African safari. "We get 10% to 15% on a trip like that," Boyd says.

Many wealthy retirees also prefer to leave the arrangements to a travel agent, particularly on long trips with multiple destinations. What's more, most retirees have always used an agent to book their travel and many of them haven't switched to booking themselves using the Internet.

Luxury ship cruises are particularly popular with wealthy retirees, Boyd says. About 60% of Preferred Travel's business is cruising.

Another source of business that's grown is group travel, where families or individuals with certain interests take trips to exotic destinations. With groups of 30 people or more, a staff member from Preferred Travel will accompany the group to make sure the trip goes smoothly.

Although Boyd's staff of 40 people is well versed in many destinations - one agent has traveled to 92 countries - it's impossible to be sure of the quality of hotels and tours all over the world. So Boyd pays an undisclosed fee to belong to a network of luxury agencies called Virtuoso, a New York City-based organization of 300 agencies that generate $4.2 billion in travel sales. Virtuoso vets tour operators, hotels and destinations to help its agents ensure they're up to the right standards.

To reach high-net-worth customers, Boyd spends a large part of her time volunteering on high-profile boards, such as the Naples Philharmonic League and the Greater Naples Chamber of Commerce. "Success will always come to those who put service to others above self," she says.

Surviving the travel bust

The terror attacks of 9/11 couldn't have come at a worse time for Wilma Boyd, the president and CEO of Preferred Travel of Naples.

Boyd had forecast travel sales of $21 million in 2001, had just bought out her partner Earl Hodges and bought a rival agency called McDaniel Travel when the terrorists struck New York and Washington, D.C., in 2001.

Sales tumbled about 40% to $12 million in sales in 2001 and Boyd quickly realized she needed to bring on another partner to weather the storm. Although she owns a controlling share of the business, her partner since 9/11 has been Jerry Nichols, a Naples insurance executive.

At the time, Boyd had 28 employees. Her agents are all on salary, so she asked them to take time off without pay. Fortunately, many employees welcomed the time off to spend time with families and Boyd did not have to lay off anyone.

Boyd knew that catering to wealthy travelers and corporations wasn't going to save her business. So she broadened Preferred Travel's business to include mass-market cruising on ships operated by the likes of Carnival and Royal Caribbean. She also didn't stop advertising.

The deep discounting by cruise lines and resorts helped buttress the steep fall in demand. And corporate travel didn't dry up completely either.

Still, it's taken six years for Boyd to return the business to the level of sales her company had before the terrorists struck. She's boosted the company's reserves in case of another incident. "We have all sorts of business insurance," she says.

REVIEW SUMMARY

Industry. Travel agencies.

Trend. Industry consolidation.

Key. Change your business plan when faced with forces beyond your control.