In the 1990s, when online travel agencies began to grow alongside the democratization of the Internet, many travel industry observers believed that traditional travel agencies were going to die out.
Jeff Willner, CEO of private investment firm Navigatr Group, which last week completed its acquisition of Ensemble Travel Group, was among them.
Now he’s a convert who thinks consortium members can double their margins.
Willner came from working as a consultant at McKinsey & Co., where he advised airlines to invest in direct distribution channels to circumvent trade, and in 2006 he founded a safari company that would becoming Kensington Tours (now in the Navigatr portfolio) which didn’t work with travel advisors for its first two years.
Willner had what he described as an “epiphany” on the importance of working with an agent to have a better vacation experience.
“Because a good travel consultant is a professional,” he said. “They know what they’re doing. They know what they’re selling. They’ve traveled themselves. They’ve been trained. They’re like any great professional, any great lawyer, any great doctor. And what they advise on is the thing that people want the most: free time and experience is the first thing on the list that people must have.”
Today, Willner says he believes counselors are “at the center” of leisure travel. Toronto-based Navigatr’s investments include the aforementioned Kensington Tours, host agency Travel Edge (No. 20 on Travel Weekly’s 2021 powerhouse list), travel technology company TripArc and Ensemble.
And he also believes that the technology developed by TripArc, combined with a professional travel consultant, can help Navigatr member agencies achieve better margins by at least 10 percentage points.
Navigatr made its biggest hit yet with its recent acquisition of Ensemble. But its interest in a consortium to complement its other investments is abiding. The company even considered an acquisition of Ensemble several years ago.
A focus on doubling margins
Willner estimates that most agencies currently operate with 10% margins. He said he believed the Ensemble members could double that.
“There are 330 member agencies, $3.5 billion in revenue flows through the consortium, and we’re really excited to use our great technology [to them]but especially thinking about our 20% margin and helping member agency owners move from 10% to 20%,” he said.
Coming out of the Covid crisis, he described higher margins as “oxygen” for agencies.
“A 10% margin is like sucking oxygen through a straw, submerged in water,” he said. “Twenty percent, at least your head is above water and you’re breathing deeply and you can be healthy.”
To do this, Willner offers a combination of vacation and service fee components in a single price and exposes the value of working with an agent.
“We explicitly state in our brand message to our customers that what they get are three key things: expert assistance, conveniences in their journey, and 24/7 support,” he said. he declares.
Willner also wants to encourage advisors to bundle multiple services. For example, he said, adding a 10% service charge on a single plane ticket would be “difficult”. But bundling air with hotel and ground transfer makes it easier to bill.
TripArc’s agent platform, ADX, allows aggregation and addition of fees, resulting in a single price for a consumer.
Willner said even higher margins are possible: Navigatr had considered buying a company that routinely made 50% markups on specialty products such as Olympics tickets.
But 20%, he said, is an easier goal to achieve “as long as you first educate your customer about the value-added services they are getting and provide those services. And make sure then you create bundles of single-priced items that you sell.”
When asked if the members of the Ensemble seemed willing to subscribe to this philosophy, Willner said the idea was to add value, not force change.
“We have learned the power of the word” and “over the past decade and a half,” he said.
Navigatr’s goal is to add capital, people and resources to strengthen the consortium.
“It’s up to the members which direction they want to go, and there are a lot of people out there who have wonderful businesses that are doing really, really well,” Willner said. “They joined a consortium to get consortium-like stuff, so we’re going to make sure we build that consortium around that.”
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