ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, April 19, 1996 TAG: 9604190016
SECTION: BUSINESS PAGE: A7 EDITION: METRO
DATELINE: NEW YORK
SOURCE: ASSOCIATED PRESS
LIMITED COMMISSIONS ON AIRLINE TICKET SALES have made it hard for some travel agencies to keep the bottom line above water. Specialized services for seniors and families are the answer for some.
Many travel agents around the nation are feeling the pinch of the changing travel industry. No longer able to depend on airline commissions and faced with increasing competition from online services, survival for many agents has become difficult.
``This is a very hard time in the industry,'' said Gloria Greenstein, who owns Gloria Travel in New York. ``There are agencies closing. We're all trying to keep up but some can't.''
Problems began a year ago when most major U.S. airlines limited commissions to cut costs.
Mindful that the agencies book 80 percent of airline tickets, the carriers had long paid commissions of 10 percent on each sale. But airlines, which had already asked their employees for pay cuts, turned the cost-cutters on travel agents and capped commissions at $25 for one-way domestic tickets and $50 for round trips.
Travel agents were enraged by the move and sued to lift the cap, arguing that many agencies would fold. The case is pending.
Some smaller agents were forced to close or merge with others. Overall, however, the total number of agencies last year increased by 500 to 33,500, mostly because of larger agencies opening branch offices, according to the American Society of Travel Agents.
``The pie is too small for everyone to get a share,'' said Steve Loucks, spokesman for Alexandria, Va.-based ASTA. ``Some markets are dictating that they need less agencies.''
Many agencies that are still open have started charging clients for certain services. Many are trying to juggle their mix of business - booking more cruises, car rentals and hotel stays - that are still paying fat commissions. Some hotel companies have even stepped up to win travel agents' hearts with bonuses for sending more clients their way.
International airline tickets, mostly exempt from the cap, have also become a solid source of revenue. It was higher international sales that helped agents break even on commissions last year compared with 1994.
Many agents are also becoming more specialized in certain types of travel, offering expertise on senior citizen services, family packages, adventure programs and disabled facilities, Loucks said.
``We had to shift our business to more leisure services after this commission cap was put in place,'' said Michael Brent, president of Englewood Cliffs, N.J.-based Travel Network Ltd., which operates 350 agencies around the country.
``We also started to go after meeting and convention businesses, which involved more than just airlines tickets,'' he said.
According to Plog Research, a travel research firm in Reseda, Calif., leisure travel will become the main focus for agents in upcoming years.
While travel agents are growing accustomed to the new structure of their businesses, they also must deal with growing competition from online services geared toward the traveling public.
Many of the commercial on-line services, like America Online and CompuServe, as well as the Internet, offer a vast amount of information on traveling - from packages to fees to flight schedules.
While only 2 percent of all travelers book on-line, that number is expected to jump to 7 percent of leisure travelers and 10 percent of business travelers by 2000, according to Plog Research.
``For business travel, this [the on-line information and services] will have an impact,'' said Stanley Plog, chairman and chief executive of Plog Research. ``Especially those who are repetitive in their trips, they don't need a travel agent.
But there were bright spots in the past year that indicate travel agents aren't dinosaurs yet. A surprisingly harsh winter in many parts of the country sent northerners south. And when they wanted to make arrangements, many called a travel agent. Three out of every four travel agencies reported increased bookings to warm destinations this winter as compared with a year ago, ASTA said. WHAT LOCAL TRAVEL AGENTS SAY
Gene Swartz, president of Uniglobe Travelmasters: His company has worked harder to sell leisure travel, where commissions on the non-airline reservations have not been cut. To compensate for the revenue loss, the company closed its office at the Townside Festival shopping center.
Renny Lynch, of Travel Professions Inc. in Roanoke County: "We're trying to do more vacations and cruises." With the cap on big ticket airline commissions his company has had to find other ways to raise revenue, he said.
Mel Ludovici, president of Martin Travel, Roanoke: To help make up for the revenue lost on commissions, Ludovici has sought to increase his business by keeping the company's Towers Shopping Center location open to 10 p.m., seven days a week. To cut costs, the company has contracted with American Express to handle its billing for accounts receivable rather than doing it in house. compiled by GREG EDWARDS
LENGTH: Medium: 96 lines ILLUSTRATION: GRAPHIC: chart - The Travel Industry APby CNB