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When A Travel Agency Makes The Front Page Of New
York Times Sunday Business Section, That's Big News!
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Press Clippings Some
Letters From Our Agents
"The Traveler, Redefined as Travel Agent "
Edwin Mc Dowell, NY Times - 10/24/99
By Edwin McDowell
For the last three years Dr. Howard Derman, a Houston neurologist, has been a travel agent
on the side. But he has never booked a cruise, a flight or even a hotel reservation for
anyone but himself. The same goes for Andrew W. Menachem, a stockbroker in Miami.
Neither is a travel agent at all, really -- except in name. But thanks to Global Travel
International, a travel agency in Maitland, Fla., with which both affiliated four years
ago, almost anyone can be considered a travel agent and potentially gain access to the
discounts, deals and perquisites of travel that the title implies.
"Who's to say who's a travel agent and who isn't, when there are no requirements for
becoming one?" asked Randy Warren, 31, the co-founder and chairman of Global Travel.
The company will give travel agent credentials to anyone who is at least 18 years old and
antes up between $250 and $495 initially and $149 a year thereafter. Since 1994, about
30,000 people have signed up, and 26,000 are still members.
This year, Global Travel's sales may exceed $120 million, vaulting it within hailing
distance of the top 50 travel agencies. Its agents do business with many of the biggest
names in travel, from Club Med to Avis, from Holiday Inn to Walt Disney Travel. It is also
a member of the major trade organizations that oversee the sale of airline tickets,
cruises and various other travel packages.
"They've grown exponentially," said Pam Kressley, Carnival Cruise Line's
business development manager for central Florida. "They're already one of my top
accounts."
In large part, however, Global Travel's success is based on getting the friends, family
and acquaintances of its agents -- armies of them -- to think of Global Travel, too, in
booking their dream vacations and weekend getaways.
Yet Global Travel's agents are relieved of having to do much of the hard work of an agent;
they make commissions simply by referring their friends and relatives to Global's
headquarters in Florida, where in-house salaried employees and vacation specialists search
the computer and the Internet for the lowest fares and rates. After making a referral, the
agent can go fishing for more prospects -- or just go fishing.
Agents can make even more money if their friends and relatives also decide to become
agents themselves. In its manual, Global Travel tells new agents that it will pay "a
referral fee each time a friend, business associate or other client becomes an Independent
Travel Agent through GTI's agent program." The payout ranges from $100 to $150 a
person.
Many of Global Travel's agents are like Derman and Menachem, simply planning trips for
themselves and enjoying the travel discounts. When Menachem booked a ski trip to Park
City, Utah, last winter, "I estimate that I saved at least 50 percent over the
published rates," he said, "and at least 30 percent off the package rate
available from many travel agencies."
Global Travel's modus operandi challenges convention, but it has so far overcome industry
objections. Last year, the Federal Trade Commission declined to take up a complaint from
the American Society of Travel Agents, known as ASTA, about the concept. And a division of
the Council of Better Business Bureaus found no problems with Global Travel's ads.
But the company's unorthodox ways do infuriate other travel agents, whose business has
already been hurt by the emergence of Internet competition and the lowering of commissions
paid by airlines.
"We consider companies that sell credentials to people who aren't bona fide sellers
of retail travel as 'card mills,"' said Paul M. Ruden, the senior vice president for
legal and industry affairs at the travel agents' society.
Joel M. Abels, the co-editor and publisher of Travel Trade, an industry publication in
Manhattan, said, "Outfits like that damage the reputation of legitimate outside
agents."
Warren is not fazed. "Since we started, we've been attacked from all sides," he
said, adding, "ASTA should be helping to make its agencies more competitive for the
future, instead of clinging to the old way of doing things and trying to define who is or
isn't an agent."
And one way or another, travel agencies are changing: The omnipresent Internet and the
ubiquitous fax machine have made it possible for large numbers of travel agents (and
others) to work from home.
But the idea of signing up armies of travel agents, many of whom will never set foot in a
travel agency, is the brainchild of Warren and his former roommate at American University,
Michael Gross, also 31.
In college, Warren majored in accounting and began using a computer to find discount air
fares and hotel rooms for personal trips. As word got around among classmates, he found
himself selling bargain travel for students headed home for the holidays or to spring
break in Florida or the Caribbean.
By booking the travel through a Boca Raton, Fla., agency that his father used for business
trips, Warren earned commissions. He also learned his way around the arcana of the travel
industry, knowledge that proved invaluable three years later.
After graduate school, Warren worked briefly for his father in the steel business, but
itched to become an entrepreneur. One day, he called Gross, who had earned a law degree at
American University, and explained his idea of a travel agency with not just a couple of
independent agents sending them customers, but hundreds or thousands of them. Gross came
aboard.
With a kitty of $8,000, raised by charging $4,000 each to their credit cards, the new
partners moved to Maitland, where the cost of living is relatively low, and opened the
business in a single small room. Working the telephone themselves, they made cold calls
and fielded calls, in response to ads they had placed in Florida newspapers offering
travel bargains and agents' credentials.
They finished 1995, their first full year, with sales of $4 million. And they haven't
looked back since.
"Our approach is to apply the 80-20 rule," Warren said. "That is, 20
percent of our people will account for 80 percent of the business." As the company
says in both its ads and its manual: "You do the business. We do the work. You get
paid." Almost as often, it adds, "But don't quit your day job."
So far, Global Travel agents seem satisfied. None of them may be close to
selling the volume of travel that many traditional agents sell. But collectively, they
give Global the clout to forge the travel business alliances -- "preferred supplier
relationships," in industry-speak -- that are enjoyed by the biggest agencies. (After
Hertz, the rental car giant, spurned an alliance with Global Travel in the agency's early
days, the company cried all the way to the bank by making alliances with Avis and Dollar
Rent a Car.)
As a result of its alliances, Global's agents may pay as little as $19 a night for a good
hotel and $15 a day for a rental car with unlimited mileage.
Ralph Heller, who owned a travel agency in Scranton, Pa., for 20 years before retiring to
Scottsdale, Ariz., and becoming a Global Travel agent, said the travel discounts that he
and his clients were offered routinely from Global were as good as the best deals he used
to get at his own agency.
Derman, the Houston neurologist, said, "I use my travel agent card mostly for
upgrades and discounts on hotels and rental cars, and it works just fine."
Unlike Tennessee Williams' Blanche DuBois, Global Travel's commission agents rarely have
to depend on the kindness of strangers. Global Travel's manual contains a reminder that
"ever since the first Travel Agent set foot in the Land of Discounts, stories have
been passed down from generation to generation about the 'job perks' of being a travel
agent, and it's true."
Global's agents around the country range from those who couldn't care less about making a
sale, except for their personal travel, to a sprinkling of those like Richard A. Weaver in
Springhill, Fla., a retired Commerce Department employee, who has put together several
large groups of friends and acquaintances to take cruises to Europe or the Caribbean, and
has four more groups signed up for next year.
But such examples do not dampen industry criticism of Global's definition of a travel
agent. "Most of these people would like to believe they're travel agents, but they're
not -- they're just referring business to a travel agency," said Mike
Pingrey, the
owner of ACT Travel in Washington.
Some travel businesses have a different view.
"One of their strengths is that unlike a lot of other agencies, their agents on
commission and those on salaries are not trying to be all things to all people," said
Bob Blumberg, vice president for sales at Club Med, to which Global Travel steers a lot of
business.
It is also a big account for Amadeus, the computerized reservation system. Doug
Fogwell,
its vice president for sales and marketing, said Global Travel is "a very exciting,
very innovative customer."
And not all traditional travel agents are hostile. John Hawks, president of the
Association of Retail Travel Agents, said Global Travel was both legitimate and good for
the industry. "People in our industry have tended to blackball anyone who doesn't do
business the way it's always been done," he said.
The petition that the Federal Trade Commission denied last year sought a rule that
effectively would have forbidden issuing travel agent credentials to anyone who had not
sold travel services in the immediate past.
And the National Advertising Division of the Council of Better Business Bureaus, after
being asked to investigate the claims in a Global Travel ad published in The Wall Street
Journal, determined last November that Global Travel had provided a reasonable basis to
support its claims about the benefits of enrolling with it as an independent travel
agency.
So Global Travel remains a threat to the 275,000 travel agents currently registered with
the International Airlines Travel Agents Network, known as IATAN, said Michael
Maino, the
organization's president. IATAN'S ID card is widely accepted as the industry standard.
Almost 48,000 IATAN agents are not on any travel agency's payroll, though they presumably
still sell enough travel to meet the group's standards.
To qualify for registration and for the IATAN card, which is accepted for discounts and
other perks by numerous airlines, cruise lines and hotels, travel agents must earn at
least $5,000 a year in commissions or salary, and must spend a minimum of 20 hours a week
selling or promoting travel.
There are no reliable statistics on how many independent agents are in the business solely
or largely for the perks. But the ranks of such people, whom other agents dismiss as
"would-be agents" or "order takers," are growing in response to Global
Travel and a handful of other companies that have followed its lead.
Global Travel is by far the biggest of the bunch, in no small part because of its ads in
newspapers, trade publications and, for the past few months, on radio stations in New
York, Chicago, Los Angeles, Seattle, Miami and Tampa, Fla.
To become one of Global's agents, applicants fill out a simple form that requires little
more than name, address, Social Security number and credit card information for paying the
fee. Global Travel then returns a 77-page reference manual and, soon thereafter, a Global
Travel agent identification card. The new agent is immediately eligible for discounts and
upgrades on hotel rooms, car rentals and cruise ships.
Most airlines, however, require an IATAN card before they give travel-agent discounts -- a
fact that is noted in Global Travel's manual, though not in its ads. The manual also says
that to earn the $5,000 in commissions required by IATAN, the agent will need "about
$80,000 to $100,000 in travel sales."
Few of Global's agents, however, regret that they do not qualify for airlines'
travel-agent discounts, which are usually 75 percent of the full coach fare. An example
shows why: The current round-trip full coach fare between New York and Los Angeles is just
over $2,000, meaning that the agent would pay just over $500. But many advance-purchase
fares, available to anyone, are already lower than that.
A list of Global Travel's top-producing agencies, provided by the company, reveals that
only four have earned more than $5,000 in commissions so far this year -- roughly 1 in
6,500. (The commission figures do not include the reward for signing up friends equally
desirous of becoming travel agents -- and willing to pay the initial fee and the annual
renewal.)
And the list of top producers includes only individuals, not the many businesses that
Global Travel said had signed up through its business development department.
When asked the names of the "national law firms" and "Fortune 500
companies" handled by Global Travel, as its manual asserts, Warren said it should
have said members of those firms, adding that he ordered a correction in subsequent
editions.
Global Travel apparently does handle many satisfied companies, among them Automotive
Marketing Services of Cornelius, N.C., a suburb of Charlotte.
"We've saved an enormous amount of money with them, somewhere in the tens of
thousands of dollars," said Peter Bond, founder of that auto consulting business,
whose 400 employees and consultants are often on the road teaching independent auto
dealers how to run their businesses more effectively.
He was drawn to Global Travel a few years ago, he said, after seeing its ad in The Robb
Report, a monthly magazine for the rich -- and those aspiring to become rich. Once Bond
signed up as an agent, his company began saving on hotels and car rentals, so Bond put his
entire sales staff and consultants on his account.
"Every one of our people are using the card," Bond said. "They'd be foolish
not to."
So what does the future hold for Global Travel?
Despite widespread criticism of its fees by traditional agents and the American Society of
Travel Agents, Global Travel appears unlikely to do away with them. "They help pay
for the newspaper ads and our costly infrastructure, including a
three-quarter-of-a-million-dollar Lucent call center system," Warren said. "By
charging fees, we'll be able to keep providing new and better services, and be able to
deliver 110 percent of exactly what we promised the customer. And if people pay, they're
more likely to commit to us."
So far, he said, the annual renewal rate is more than 90 percent.
The fees are unlikely to rise, though, because a fee of $500 or higher would bring the
company under laws governing franchises -- the very thought of which is enough to invite
angina in both partners.
"Every state would have jurisdiction," Warren said, "and it would be way
too cumbersome."
Expansion is more like it. Gross, Global Travel's president, said the company was
considering various options. Among them, he said, "going public is definitely in our
future and something we're currently considering."
Meantime, the company's sights remain fixed on American Express, the industry giant, and
rivals like Travelocity, owned by AMR's Sabre Group, and Microsoft's Expedia, travel
companies that have also broken with tradition and have made use of the Internet. While
respectful of their competitors, the partners do not appear fearful.
"The trick is to find opportunity by taking advantage of the future," Warren
said. "While some agencies are still thinking about brick and mortar, we're already a
click-and-mortar agency."
More Press Clippings
 | "A great way for people to earn extra income or start a second
career" - Los Angeles Times
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| "To Grow You Need A Company That Can Respond To Change And
Opportunity At A Moment's Notice" (Referring to GTI) - INC. Magazine
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| "The nations fastest growing Travel Agency - Can
(GTI) make the
traditional travel agent and endangered species?" - Fortune Magazine
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| Arthur Andersen's "Fast Track Five" list for 1998 as their #1
growth privately held company with 2300% Growth in the past 3 years
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| "A travel company that has taken the U.S. Travel Industry by
storm." - The Orlando Sentinel
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| "Global's sales force is a diverse group of Lawyers, Housewives,
Retirees, and owners of small and mid sized businesses." - Travel Agent Magazine
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| "Global Travel International ranks 15th in the Orlando Business
Journal's 1998 Golden 100 list (of Florida's fastest growing companies)
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Some Letters From Our Agents
The following are letters sent to us by GTI agents within the past year.
We have just omitted their names.
Dear GTI,
To say that the benefits of becoming a GTI Agent far outweigh the costs of membership is
an understatement! More precisely, becoming an Independent Agent has literally changed the
way I travel. The savings I've received from air, hotel, and package travel have been
tremendous. Everything from a $75 per night Travel Agent Special at the New York Swiss
Hotel (normally $300 per night) to first class upgrades on certain airlines (notably
TWA)
and even commissions as compensation for the small amount of "bargain hunting"
are all cause for celebration. I also look forward to your newsletters each month, they
give me the best reason I can think of for continuing to travel - savings!
Dear GTI,
My wife Julie and I, both GTI Agents, had the pleasure of staying at the Boston Marriott
Copley Place Hotel. We were treated like Gold! We stayed in the Deluxe Concierge Suite for
two nights and were only charged $105 per night for a $325 suite. (savings of over $200
per night). Additionally, we were given a gift basket, including fresh fruits, champagne,
etc. and allowed to check out late, due to our GTI travel agent status. We were even given
a free room service meal. All in all, our total savings aggregated approximately $600 for
our two night stay. We could not have had a better time or been treated more royally.
Dear GTI,
All I do is give the 800 number to my friends, family, and business associates and the
checks keep coming while I sit back and enjoy. It's a great home business!
Dear GTI,
We Just completed an extended holiday to New Zealand and Australia. In the two month
period of our trip, we saved several thousand dollars on hotels using our agent photo ID
card. We usually received a minimum of 10% discount at the small hotels and a 20% to 50%
off at the larger hotels. We know the savings were real because we always asked the rate
before asking for any discounts. We saved primarily in first class facilities. therefore
the savings in more than 60 days were substantial. Our best estimate is $4,000 to $5,000.
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