insideStory
THE RISE AND RISE OF THE $250 MILLION
HOME-BASED AGENCY SECTOR
By Ian McMahon
HOME-based travel agency groups
have recently issued a spate of press
releases pointing to spectacular
increases in sales and numbers.
Many of the claims are based on
percentages which invite the retort
from rival business models that they
may be coming off a low base.
But they contain more than
enough hard data to demonstrate that
home-based agents have entrenched
themselves as a significant force in
Australian travel retailing.
Barely three years ago, Travel
Counsellors did not exist in Australia.
But the UK company, which launched
20 travelBulletin August 2010
its Australian operation in June 2007,
now has more than 100 home-based
travel agents.
In February 2008 TravelManagers,
which has subsequently been acquired
by New Zealand’s House of Travel,
trumpeted “a major milestone” with
the signing of its 90th personal travel
manager.
Two and a half years later that
number has soared by almost 300 per
cent to 267.
The longer-established Mobile
Travel Agents (MTA), which recently
celebrated its 10th anniversary, has also
been steadily increasing membership.
By the end of the last financial year
it stood at 210, a 30 per cent increase
over the preceding 12 months.
More importantly, the turnover being
achieved by home-based agents is now
reaching volumes that have suppliers
sitting up and taking notice.
TravelManagers won’t divulge
revenue figures although it claims
to have achieved an 82 per cent sales
increase in the second half of the
financial year to June 30, 2010.
However revenue results released
by Travel Counsellors and MTA point
to solid revenue achievements and
provide the basis for “back of the
envelope” calculations of the total
business now being generated by the
home-based agent sector.
Travel Counsellors says it wrote $3.8
million of sales last month and this was
a 129 per cent increase on July 2009.
In its last financial year (to October
31, 2009), Travel Counsellors reported
sales of $19 million. This financial year,
the company is projecting that it will
achieve turnover of $50 million, with
sales already at $27 million.
MTA founder and chief executive
Roy Merricks is more measured in his
comments on revenue growth.
“In the last GFC-affected financial
year (to June 30, 2010), our sales
figures were only marginally higher
than the previous year although with
a strengthening global recovery we
are now seeing dramatic revenue
increases,” he says.

Image credit: www.photolibrary.com
Merricks adds that it is important to
distinguish between overall sales and
results achieved in particular market
segments. He says he could quote
increases in sectors such as cruising
“even better than those (quoted by
rivals)”.
Merricks puts MTA annual sales
at $85 million. Combining the MTA
and Travel Counsellors turnovers and
dividing by their consultant numbers
gives a rough average of $400,000 sales
per home travel agent.
Of course, this is a ball park
calculation and, in any case, some will
be doing more than this average and
many will be doing less.
Nevertheless it provides the basis for
an approximate estimate of the worth
of the home-based agency market.
Throw in Travel Managers’ 267
consultants, assume they also write an
average $400,000, bear in mind that
numbers are growing strongly and it
seems reasonable to assume the “big
three” of the home travel agency scene
are probably delivering close to $200
million in business to their suppliers.
But this figure does not take into
account the smaller home-based travel
agency groups such as Melbourne-
based Travel Concepts and Western
Australia’s Travel Associates Australia.
Travel Concepts manager Oktay
Ilgun says he spent 12 months beta-
testing his approach to home-based
travel agents with four freelance
consultants.
That was two years ago. He launched
his home-based group a year ago and
says he has increased numbers to 13.
“We have been attracting one sign-
up a month and our overall turnover
has increased 32 per cent – although
I would have to say our yield increase
has been more modest,” he says.
As MTA’s Merricks points out, home-
based or freelance consultants have
been part of the travel industry scene
since well before the organised groups
emerged.
They range from large agencies –
like the award-winning WOW Travel,
a fully licensed retailer which just
happens to operate from residential
premises – to freelancers loosely
attached to accredited agencies that do
their ticketing in return for a split of
the commission.
One credible source suggested to
travelBulletin there could be as many
as 900 home-based travel agents of one
sort or another throughout Australia.
A conservative and credible
approach would be to “guesstimate”
the combined annual turnover of the
home-based agents operating outside
the “Big Three” as at least $50 million
(ie. about what Travel Counsellors,
the smallest of the three at this stage,
anticipates its 100-plus members will
achieve in its current financial year).
That suggests home-based travel
agents in Australia are writing about
$250 million of business a year. The
real point, of course, is that these
already substantial volumes growing at
a rapid rate.
Clearly, much of the revenue growth
is a result of the increasing numbers
of consultants opting for this business
model.
But the major companies are also
looking closely at what they can do to
increase the productivity of existing
members.
Travel Counsellors acting general
manager Cathy Burke has no doubt
that numbers will continue to grow
steadily but she sees the spectacular
increases of recent times stabilising so
that more emphasis will be placed on
developing the turnover of those who
have already signed on.
Recently arrived in Travel
Counsellors’ Melbourne office from
the UK is Tracy Parkinson who will
spend 12-18 months here as a business
development manager helping member
agents grow their businesses.
Parkinson will join a Travel
Counsellors roadshow visiting
Brisbane and Sydney in coming weeks.
At MTA, Merricks says his company
has, over the past year, bolstered its
staff with the appointment of dedicated
land and air product managers and a
national training manager.
While declining ‘to name names’,
Merricks says there was a time
when some suppliers would
actually forego bookings rather
than go to the trouble of servicing
home-based agents.
TravelManagers chairman Barry
Mayo says his company employs five
business partnership managers, one in
each mainland capital city.
“These positions are critical in
ensuring our personal travel managers
can be as successful as they wish to be,”
says TravelManagers executive general
manager Mandy Scotney.
“They (the business partnerships
managers) must be able to understand
the individual business needs of our
personal travel managers and assist
with the delivery of those needs.”
Meanwhile suppliers have belatedly
recognised the advantages of working
with home-based agents.
While declining “to name names”,
Merricks says there was a time when
some suppliers would actually forego
bookings rather than go to the trouble
of servicing home-based agents.
Last year in an address to the
Council of Australian Tour Operators,
Travel Managers’ Scotney pointed to
the reluctance of sales representatives
to work with home-based agents
when they got no credit for sales went
through TravelManagers’ Sydney head
office.
However things are changing rapidly
with all the home travel agent groups
reporting that many suppliers are
now providing dedicated national key
insideStory
However things are changing
rapidly with all the home travel
agent groups reporting that many
suppliers are now providing
dedicated national key contacts
and priority phone lines.
contacts and priority phone lines.
There are still some issues with
representatives calling on home-based
agents but this is not a major concern.
“We don’t want reps calling on our
members,” says Travel Counsellors’
Burke. Instead, she says, the company
prefers to organise presentations and
seminars (or webinars) where suppliers
can offer product training.
TravelManagers’ Mayo says a key role
for the company’s network of business
partnership managers is organising
product training sessions, possibly
involving more than one supplier, at
locations geographically convenient
for members.
MTA’s Merricks says: “We do make
working with our agents quite a lot
easier for them (supplier reps) by
providing them webinar access and
encouraging dedicated functions.”
And Travel Concepts’ Ilgun says:
“We try to organise training sessions
for our members, and our consultants
generally attend functions and
launches.
“We have a very good rapport with
our preferred suppliers’ sales managers
and can help our consultants with any
issues they may have.”
One factor impacting on the growth
of home-based agencies is Western
Australian legislation requiring that
the agents must be employees of their
licensed parent company.
“We would love to be in WA,” says
Travel Counsellors’ Burke but adds that
her company is not prepared to vary its
business model and give WA agents a
deal that’s different to what they offer
agents in the rest of Australia.
However Mayo says TravelManagers
has adapted its model to meet WA
requirements and MTA’s Merricks
says: “Given the way we are structured
and conduct business, the WA
Department of Trading and Consumer
Protection acknowledge MTA Travel is
compliant.
“All our clients have full financial
protection under MTA’s fund file
membership of the TCF regardless of
where in Australia they live. They also
have all of the rights available to them
under consumer protection laws.”
travelBulletin August 2010 21