Independent players form mega-agency to confront travel trends.
When Joel Ostrov was just 10 years old, his family on went on a plane trip for the first time, a two-leg vacation jaunt through Boston to Miami. For most people this wouldn't be a big deal, but the trip changed his life.
"I was hooked," said Ostrov, co-president and COO of Le Groupe Voyages Vision 2000. "I fell in love with the planes, the airports, the happy people, everything. I knew right away, that whatever I ended up doing in life, it was going to be related to travel."
When Ostrov's family got back to Montreal, he convinced his father to buy him an $80 copy of the official airline guide, which listed flights by major airlines around the world.
Forty years ago $80 was a lot of money. But it was well spent. Ostrov spent countless hours poring through the 2" thick book, planning imaginary trips around the world. Eventually, he began charting real family vacations and the experience later gave birth to his career.
Today Ostrov, along with co-president and CEO Nick Ceravolo, heads one of the province's largest independent travel agencies, whose 145 employees are on track to bill more than $100 million in sales this year.
But it hasn't been easy. The travel business has been hit by a string of bad luck recently that includes the September 11th attacks, the tech bubble burst and corporate belt-tightening. But it was the decision by major U.S. carriers in the late 1990s to stop paying agency commissions, echoed by Air Canada and other players that hurt independent agencies the most. Yet ironically, it was that decision led to the formation of Le Groupe Voyages Vision 2000.
Ostrov initially wanted to run his own show. After graduating from McGill, he did a six-month stint with a competitor agency. But in 1977, armed with a $5,000 loan from his father, he and a friend founded their own firm, Partners in Travel. Business was good, and over the years the company built up a loyal customer base.
But things started changing in the late 1990s, when airline companies made the disastrous decision to try and cut out the travel agency middlemen, who had been their partners for decades.
On the surface the move made sense. With one less layer on the distribution chain, prices would drop and more people could afford to travel.
In practice the move had mixed results. The major airlines have far higher labor costs than the agencies, so in practice, it's in their interest to outsource as much of the distribution process as possible. A perfect example to emulate would be the banks, which are increasingly outsourcing mortgage business to brokers.
The airlines went in the opposite direction, beefing up on Internet technology, yet completely overlooking the crucial customer service aspects of travel marketing.
By early 2000, Ostrov and the owners of two other Quebec agencies, Future Travel and Options Voyages knew that to survive they were going to pool their resources. Their bet was that as a group, they would have more buying power with the airlines, and would be better positioned to take on the U.S. owned travel giants such as American Express and Business Travel International (BTI). Earlier this year a fourth agency, Sentra Travel, joined. Each of original partners owns 25 per cent of the company.
The company has a national affiliation with Vision Travel groups in Ontario, Alberta, BC and Eastern Canada through Vision 2000 Travel Group Inc., which is owned by its regional affiliates.
"With the partners in our cross-country network we do about $275 million worth of sales," Ostrov said. "Suppliers look at you a lot different when you have those kind of numbers."
According to Ostrov, the key to Vision 2000 Travel Group has been the original owner's ability to work as a team.
"Each of us knows the business from the ground up and is used to running our own show," Ostrov said. "Our challenge is to focus in the area that we know best."
According to Nick Ceravolo, he and Ostrov have adopted an inside-outside approach toward divvying up management tasks.
"I deal with sales, supplier and media, (Joel) handles
administration," Ceravolo said. "There can be a lot
of overlap, so in practice the lines are less clear. But we have
a good rapport and can handle problems as they come up."
According to one company client, service remains a key selling point in delivering corporate travel.
"We dealt with a U.S. owned agency in the past. Although they treated us well, they had to call head office for every little problem," said Gerry Felice, a purchasing manger at Future Electronics, which gives Le Groupe Voyages Vision 2000 seven figures worth of travel business each year. "Now, if I have a question I can get Joel on the phone at any time. They are much more responsive."
Although business travelers remain stingy, according to one industry observer the drought may be nearing its end.
"A couple of months ago it was slow, but the comments we have been hearing from agencies during the last few weeks have been extremely positive," said Wim Bless, general manager of the Association of Canadian Travel Agencies' Quebec office. "SARS is now behind us and so is the Iraq war. People need to travel if they want to stay sane. They can't stay away for ever."
Sidebar: Getting Ahead
o Joel Ostrov has been interested in travel since he was a
little boy. He and a partner founded Partners in Travel soon
after he graduated from college.
According to Joel Ostrov, co-president and COO of Le Groupe Voyages Vision 2000, the company has responded to challenges in the travel industry by consolidating with smaller players to increase buying power with major carriers and tour operators.
|© 2003 Peter Diekmeyer Communications Inc.|