Volume 262, No. 12 • November 9, 1998
Outside Force: Global Travel International's
Controversial Strategy Aims to Grow Sales Through Thousands of Outside
Agents
By Sally O'Dowd
Outside Influence - Global Travel International is trying to redefine
what a travel agent is.
What is a travel agent? As the number of home-based and part-time
travel sellers grows, the industry has been forced to answer that
question. Most full-time agents say those companies that offer
consumers training and travel agent identification for a fee, usually
under $500, are a threat to the profession. Nevertheless, several
companies believe the future of travel retailing lies in tapping more
consumers, both corporate and leisure, to act as outside sales
representatives. Indeed, the founders of Global Travel International
(GTI) are aggressively aiming to build a $500 million enterprise using
a network of outside sales reps.
Known for its controversial ads in The Wall Street Journal, which read
"Slash Your Travel Costs-Become a Travel Agent Today," GTI
claims its approach to travel retailing is unique. "We don't see
ourselves as a travel agency," says Michael Gross, president of
the Maitland, Fla.-based company. "Rather, we see ourselves as a
marketing company wrapped around a travel agency." GTI is already
a $100 million company with 20,000 outside salespeople, who book
travel for themselves and others through 70 inside agents in two
offices. While some outside salespeople call to book only a small
amount of travel, the company as a whole is committed to growing
through outside reps. "We believe...that the sum of our parts is
more important than the individual parts," Gross says. "Our
focus is on selling travel."
Gross was asked to help
start the company by GTI Chairman Randall Warren, his former roommate
at American University in Washington. Both men caught the travel bug
while in college in the late 1980s. Warren got his start by arranging
travel for sororities through an affiliation with his father's travel
agent in Boca Raton, Fla., who promised travel discounts and
commissions in return for sales. One day Gross was walking toward his
dorm room and there was a line of sorority girls outside, waiting to
talk with Warren about their spring break trips. Gross wished he could
be so lucky. "What I'd been trying to do, unsuccessfully, with a
few clicks of the keystroke, Randy had just brought them in,"
Gross recalls. "I thought, 'Travel's a business I want to get
into."
A New Idea?
Upon graduation, however, the two friends chose different career paths
because they didn't think selling travel would make them any real
money. Warren went on to receive a master's degree in accounting from
George Washington University and Gross earned a law degree from
American. But Warren didn't give up on travel. While lying in bed one
night, he thought, "If I could refer all these people coming to
my door to a centralized location and I could still get paid for it,
how easy would that be?" He proposed the idea of such an outside
sales force to Gross. "Independent travel agents are nothing
new," Gross says. "Randy's idea was, rather than having five
or 10 travel agents, why not have 5,000 or 10,000 independent travel
agents?"
So Warren and Gross set up shop in Maitland, where the cost of living
was cheap and they could keep their expenses down. They each charged
$4,000 on their credit cards to make their initial investment and paid
off the bills in a few months. Neither of them earned a salary for a
year and a half, so they lived modestly. Warren drew from his savings,
and Gross depended on his wife's income. "Everything was riding
on Global," Warren says.
The partners incorporated their business in April 1994, and in the
fourth week they sold $8,000 in travel. By the end of 1994 they had 50
outside agents. A year later 480 outside agents were selling $4
million in travel. In 1998 the 20,000 outside agents are expected to
sell $100 million. *
Those figures make Global, whose revenue jumped 2,400 percent from
1995 to 1997, the fastest growing company on the 1998 Golden 100 list,
the Orlando Business Journal's ranking of the area's 100 largest
privately held companies, based on annual revenue. Global has the
15th-highest annual revenue, according to the September edition of the
publication. Global does not disclose annual profits or commission
totals.
Global's sales force is a diverse group of lawyers, housewives,
retirees and owners of small and mid-size businesses interested in
cutting corporate travel costs. Business owners who employ up to five
people represent between 30 percent and 40 percent of total outside
agents. While they join GTI to cut costs, they often go after extra
income by selling travel to others, Warren says. He points out that
the Journal ads are aimed at a corporate audience, but sometimes they
cost more than the money they generate. "Sometimes the ads
themselves are losers," Warren says.
In order to join GTI, outside agents must pay $495, complete an
application and read an 80-page manual, including 30 pages of industry
terminology. The GTI book defines the company's independent agents as
referring agents or brokers, who do not have to worry about the
details of typical agents. "You refer the business, we do the
work, you get paid," it states.
But GTI is changing its expectations of outside agents, and next month
it will begin to offer fam trips for those interested in learning how
to sell cruises. To steer that initiative, the company has hired Steve
Skidgel, former senior sales manager of Cruises Only, a division of
The Travel Company, as its director-cruise operations. Under Skidgel's
leadership, GTI hopes to turn 2,000 agents into cruise specialists,
focusing on such preferred suppliers as Carnival Cruise Lines, Holland
America Line, Princess Cruises and Royal Caribbean International.
GTI's outside salespeople can also send direct-mail pieces, make sales
calls, speak publicly about the company and write travel columns for
their local paper. GTI's agent and customer services department
approves outside agents' promotional materials and helps them develop
marketing programs. "We don't want our travel agents handling an
itinerary," Gross says. "We want them to be selling-selling
to their friends, selling to their family, selling to their business
associates." Agents and their clients then call the company's
inside consultants to book travel.
Pay Plan.
GTI provides many ways for its outside agents to make money. They
receive 50 percent of all commissions earned on cruises, tour and
packages. Effective Nov. 1, they now earn 10 percent on air tickets,
down from 25 percent. Warren says GTI reduced the compensation on air
because it wants its agents to become less reliant on such commissions
and more dedicated to selling cruises, tours and packages. In
addition, outside agents can increase their income by expanding
Global's ranks. They typically receive up to $150 whenever a friend
becomes an independent agent, but in August, they could earn $1,000 if
they referred five people.
GTI's company manual also describes outside agent perks, including
discounts that are often up to 75 percent on standard rates on airline
tickets and at more than 7,000 hotels, Gross says. While they don't
receive normal agent discounts on cruises, they do pay less than
typical consumers because GTI buys block space, he says.
While GTI's cruise initiative is intended to improve outside agents'
knowledge of that segment, the company relies on 70 salaried
consultants in Maitland to become product experts. When outside agents
or their clients call to book, they are referred to consultants in one
of several departments-domestic travel, international travel, cruise,
packages and tours, group and meeting planning, and corporate travel.
Lined up in rows of small cubicles, the consultants take up to to
2,000 calls a day, from 9 a.m. to 8 p.m. Mondays to Fridays, and 10
a.m. to 5 p.m. on Saturdays. Inside agents provide travel advice
similarly to traditional agents. GTI employs another 50 support
people, who work, for example, to maintain its Web site (www.GTIWeb.com),
which generates 30 percent of the company's air sales.*
While GTI's operations appear to be highly organized, its strategy has
been subject to criticism. Some fear the reputation of traditional
agents will be hurt as a result of GTI's ads, which emphasize getting
into the business merely to get good deals. "The ad indicates
that the reason to pay this money is to get travel discounts, and that
creates and improper image to the public of who and what travel agents
are," says Gary Schmidt, vice president of Woodbury, Minn.-based
Travel by Nelson. Consumers who see the Journal ads may think that all
travel agents are just in it for the perks and that they don't have
true expertise, he says.
Schmidt also fears that suppliers who give discounts to GTI's 20,000
agents-and outside agents working for other companies with $495
promotions-will pass on costs to the general public. But Warren and
Gross stress that their agents are salespeople who get volume
discounts. "These people refer business to the tune of $100
million," Warren says.
Other industry executives praise GTI's approach. "I wish all my
accounts were like Global," says John Andrews, Amadeus' national
sales director. "They use the Internet quite extensively to
promote their product, which is awesome. We love that. They get a
bigger marketshare through the nation." Global also is a good
client because it produces high volumes with relatively few employees,
Andrews says.
Elsewhere, GTI's year-to-year sales of Carnival Cruise Lines have
increased significantly, though the company initially sold only a few
cabins, according to Carnival spokeswoman Jennifer de la Cruz. Since
1996 sales have increased by 90 percent to more than 200 percent each
year, de la Cruz says. That growth is typical of young, determined
companies that begin by selling at low levels. "If you have an
organization that's committed to selling cruises, these sort of
increases can be easily obtained," de la Cruz says, adding that
Global receives volume overrides.
Ralph Bobo, secretary and treasurer of Bobo's Inc., which owns Blue
Ribbon grocery stores in Tampa, says he may not sell a lot of travel,
but nevertheless he is an agent. He usually refers travel for one or
two people a week, although he declines to release his sales figures.
He says he signed up with GTI four years ago because he had enjoyed
arranging his family's travel and he wanted the respect and discounts
that agents receive.
There's no difference, Bobo says, between what he does and the spouse
of an executive who gets an agency job to earn a little extra money
and travel more economically. "Every travel agent is looking
forward to the discounts." He says. "That's why they get
into it."
ARTA President John Hawks says Global is "absolutely"
legitimate and that he appreciates the company's presence in the
marketplace. Says Hawks: "Their business is not much different
from an agency with 500 outside agents or 20 outside agents."
Hawks says GTI does not vie for business directly with ARTA members,
whose clients often prefer to work with local agencies. "Most
ARTA members are not afraid of competition as long as it's fair
competition," Hawks says. ASTA officials would not comment for
this story.
Global's leaders hope to capitalize on the growing number of people
interested in becoming outside agents, even if that includes employees
of traditional agencies. But such agents would have to view the world
differently if they joined GTI. Traditional agencies view challenges
as threats, whereas Warren and Gross see them as opportunities to
grow. Already, GTI's outside agents have 230,000 customers, in
addition to themselves. Says Gross: "That's the power of what
we're doing here. That's what we can offer our suppliers-the chance to
market and distribute through all these people."
* Highlights selected from Travel Agent - The National Weekly Magazine
of the Travel Industry, Volume 262, No. 12 • November 9, 1998
* As of August 2002 Global Travel has
over 40,000 Independent Travel Agents in 50 States and 85 Countries
serviced by a team of over reservationists and support staff in
Florida. The current price for their program is $495 with an annual
renewal of $129.
