“You own the business so you make the decisions on what you sell”: Special series, part 4

“You own the business so you make the decisions on what you sell”: Special series #4

This story originally ran in the April 11th, 2019 issue of Travelweek magazine. To get Travelweek delivered to your agency for free, subscribe here.

TORONTO — For any agency owner contemplating a move to a host agency, misconceptions about the loss of their brand and giving up control cause the most concern. For owners weighing the pros and cons of selling their agency, the biggest worry is for the employment and wellbeing of their staff.

The what-ifs are endless, and they’re occupying the minds of more than a few owners of small to mid-size agencies who may be looking to downsize their responsibilities – or even to sell – while still staying in the industry they love.

In this 4th installment of Travelweek’s 5-part series we talked to agents and agency groups, from host agencies looking to grow their membership ranks, to retail groups interested in acquiring smaller agencies, about the biggest concerns facing owners as they contemplate their next move.

Maritime Travel has doubled its size through acquisitions over the past 10 years. The company currently has about 115 agencies with a 50/50 split between Atlantic Canada and the rest of the country.

When speaking to agency owners about a possible sale, Maritime Travel President Gary Gaudry says the agency’s employees are almost always the owner’s number one priority. “The most common concern is owners want to make sure their staff are looked after. Most have worked together for many years.”

What else does Gaudry see? “When owners are ready to sell, they are not sure what to do. Their decision to sell is usually last minute and they do not know who to contact or what the process is.”

Gaudry looks at and evaluates most of Maritime Travel’s acquisitions himself and understands that “confidentiality is key. We have had acquisitions that did not proceed and in no case has this ever come to light.”

He adds: “We are very flexible and work with the owners to make the sale as easy as possible. We truly understand selling an agency you have owned for many years is very emotional and difficult – but we work with each and every owner to help make the sale as easy as possible.”

Many retail groups on the acquisition trail, including Maritime Travel, work with a mix of agency owners, some who want to exit the industry and others who want to stay on post-sale.

Agency owner Isabella Beane, profiled in part 2 of this series, opened Port Moody Travel in B.C. in 1988 and operated it as an independent agency until July 2015 when she sold the agency to Maritime Travel with a view to retiring. Beane’s main concern was for her agents but post-sale, she says, “my staff were protected and all have embraced the change.”

For owners who don’t want to sell, but might be looking at joining a host agency, there are other concerns.

Karen Scott Caplice, Director, Business Development for host agency Travel Edge, says branding is a top-of-mind issue. “At Travel Edge we allow an agency to white-label our ADX (Agent Digital Experience) proprietary booking software and when they are joining Travel Edge as their host they can keep their own name. They would just add a tag line ‘affiliated with Travel Edge’.

“An owner may feel that clients are dealing with them because of their name, and if they change, they will lose their identity and ultimately, their clients,” says Scott Caplice. “The reality is, if the same person is answering the phone and they are getting the same (or better) service, the client will stay loyal.”

She adds: “Agency owners are very nervous to give up control. They have owned and run their business for multiple years so it is frightening for them to suddenly give up control to someone else. Particularly if they have staff, will they be treated fairly and have a future with the host? With Travel Edge the staff would stay attached to the owner – if that was how they wanted to have it set up – or they could have their own direct agreements with us.”

Staffing and branding are top of mind with new agency owners as well. Travis Stewart worked as a Branch Manager and then Operations Manager for 12 agencies until 2014 when he opened up Stewart Travel Group with his wife. The home-based PEI agency has more than a dozen agents. “It is very tough to open a new agency and try to be successful in a small province although now we have 14 trusted traveller advisors across Atlantic Canada working with us as partners and is very important to us to support and market them so they can find the best balance for them,” says Stewart.

Stewart and his wife chose The Travel Agent Next Door. “When we started the process we looked at two main companies and had many conference calls with the owners and TTAND fit everything that we wanted. It was very important for us to brand Stewart Travel Group as an independent owned agency within the province of Prince Edward Island.”

Flemming Friisdahl, founder, The Travel Agent Next Door, says making sure agency owners have the autonomy to run their agency the best way they see fit is crucial. With TTAND, he says, “the key is having a team of dedicated professionals to support you and be invested in your business like you are. TTAND does not make money if you don’t succeed. We get paid a small portion of what you bring in (most agents keep up to 100% of the commission 55% of the time) yet you own the business so you make the decisions on what you sell.”

Host agencies, intent on adding new members to grow their ranks and expand their footprint, are going out of their way to allay concerns, including some they may not have even thought of.

Home-based agents looking at retirement or semi-retirement comprise a growing number of retailers. Mike Foster, President, Nexion Travel Group – Canada, says “every business owner needs to have a succession plan, and this is where a host agency can be helpful, with business coaching and networking opportunities to prepare travel advisors for a semi- or full retirement.”

Foster adds: “Travel advisors are very customer-focused, and that’s where their worries hinge: what happens to my clients if I can’t do this work anymore, or just don’t want to? Advisors working with us can form strategic partnerships and alliances. I know travel advisors who back each other up in case of emergency (and on vacations!) and make sure they can access the other’s books and business and files so that client service is never interrupted. Some of our members even have a plan to officially transition business to another member as they wind down. This presents a nice solution to the problem of working less while not retiring completely.”

Zeina Gedeon, President, TPI – Travel Professionals International, says TPI’s model is great for agency owners looking to wind down. “It gives them the freedom to continue doing what they love without the hassles of back office, BSP payments, etc.

“Some agencies are hesitant as they don’t know what their next stage looks like … [there’s a] fear of giving up their storefront and brand they have built. Once we walk them through our program we find that their worries dissipate.”

Lee Zanello, General Manager, Independent by Flight Centre, says it ultimately comes down to agency owners wanting to retain exactly that – ownership – that pride of ownership “over a business they have built, and handing over control to a host.” 

Independent by Flight Centre is flexible in working out a partnership agreement with agency owners, says Zanello. Sometimes the host’s strong branding can be an issue as well. “While there are a number of perks to aligning to the Flight Centre brand, we definitely do not require agencies to paint themselves red and white or even use our name at all,” says Zanello. “It all starts with a good conversation around the needs of the agency and only inserting our systems and support where they can be the most beneficial.”

Travelweek’s 5-part special series looks at the options available particularly to owners of small to mid-size agencies with annual sales of up to $3 million or so, who may be looking to sell, or downsize their responsibilities, while remaining in the industry. Click for Part 1, Part 2, and Part 3.

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