Travel agency succeeds by keying in on business clientele
Travel agencies have taken a big in recent years. As if the elimination of the commissions that airlines pay them weren't enough, the effects of the 9-11 events and the stock market slump have thrown the industry into a tailspin. But one company that seems to be weathering the storm is Groupe Encore I.T.S.
Just don't call them a traditional travel agency. "We are a travel management firm," said Monique Mardinian, Groupe Encore I.T.S.'s president, founder and sole owner. "Ticket sales are the least important thing that we do.
In a cut-throat industry, Mardinian has kept her company a step ahead of the competition by concentrating on the lucrative corporate market, providing travel management services to companies with larger budgets, typically exceeding $1.5 million a year.
Packages are custom tailored to each client's individual needs. Services can include negotiations with airlines, railways and hotels, travel database management, as well as specialized reporting and education seminars.
Groupe Encore I.T.S. competes against much larger and established U.S.-owned players such as American Express and Carlson Wagonlit Travel. But according to one customer Groupe Encore I.T.S. has a unique advantage.
"They are relatively small and can offer a personalized service," said Charles Roberge, director of information technology at Air Liquide Canada. "They design products to meet your needs, which is something bigger companies have a harder time doing."
Mardinian got into the travel business early, when she bought a small, financially troubled traditional agency in 1987, about a year after graduating from Concordia University.
"I studied actuarial mathematics, which was a pretty boring subject," said Mardinian. "I tried many part-time jobs. Then one day a got a part-time job doing the bookkeeping in an agency, and I got bitten with the travel bug."
Soon after, despite the fact that she had almost no experience, Mardinian picked up the Yellow Pages, and started phoning agencies looking for one to acquire. She soon found a suitable candidate on the upper floors of Place Bonaventure, and somehow managed to convince a bank manager to lend her most of the $58,000 needed to buy the place.
But that was the easy part. Next came three years of 16 to 18-hour days. "Fear is a great motivator. I didn't have money or experience. I had nothing to put into the business except my time," said Mardinian. "But when you love what you are doing you don't count the hours."
Slowly but surely Mardinian broadened her customer base beyond the agency's original client list. But it was when she landed the Hitachi Canada travel account in 1990, that she really knew that she was on to something special.
According to Mardinian, Groupe Encore I.T.S. is now the largest Canadian-owned travel management company. Sales during 2001 were close to $40 million, and are on track to hit $50 million in 2002.
It's not a bad performance in an industry that according to the International Air Transport Association has seen a 8.9 per cent drop in North American revenue-passenger kilometers traveled between January and July 2002, compared to the corresponding period in 2001.
According to Michel Peladeau, director of Finance at Ericsson Canada, one of Mardinian's biggest clients, managing the comings and goings of company personnel is a key challenge for business today.
"About 1,000 of (Ericsson Canada's) 2,000 employees travel each year," said Peladeau. "That makes travel the second biggest expense at our Montreal office after payroll costs."
As with many of its accounts, Groupe Encore I.T.S., assigns several of its staff employees to work directly out of Ericsson's offices. These employees act as Ericsson's quasi in-house travel department. In fact more than half of the agency's 45 personnel, work off-site, in customer's offices.
Unlike traditional travel agencies which bill customers in the form of service charges, Groupe Encore I.T.S. prefers to bill an annual management fee, combined with an incentive program to reward the agency for cost savings it generates.
"If an agency manages a $5 million travel account, and is paid as a percentage of the budget, what incentive do they have to reduce expenses?" asked Mardinian. "So we create a win-win environment where both our clients and us can come out ahead."
Savings are calculated by periodically comparing the price the client paid for its tickets in a given period, with the published IATA rates.
According to Mardinian clients are less reluctant to book travel with an agency, if they don't have to pay premium to do so. As a result they tend to consolidate their purchases with Groupe Encore I.T.S., which makes it easier to for the firm track expenditures and to negotiate volume rebates for their clients.
But despite her success, Mardinian can't just sit still. The industry is consolidating, and Groupe Encore I.T.S., is in a position where the company will have to grow either through acquisitions and organically.
Sidebar: Mardinian's strategy for getting ahead
o Choose an industry that you love so that the long hours
don't feel like work
|© 2002 Peter Diekmeyer Communications Inc.|