as the trend of consolidation and the impact of technology are affecting
industries, such as banking and telecommunications, to accomplish economies
of scale and to better compete in the global marketplace, the travel
industry, too, is undergoing a similar transition. We have seen the
mergers in the lodging and air segments, noted Roger Ballou, chairman
and CEO of Thayer Capital Partners, who expects to see more mergers
occur among the more than 2,000 players in the travel package segment.
The marketing opportunities are vast, said Ballou,
a keynote speaker at ATME's 1998 annual conference, who believes that
demographics of the largest leisure travel group (55 to 65-year olds-the
fastest growing segment, which also has the most money to spend) guarantee
the long-term stability of the leisure market.
Moreover, he noted that annual receipts from the
U.S. vacation travel market is estimated at $370 billion, of which $100
billion is comprised of vacationers who spend $750 or more on leisure
travel. Because the package component of that market is only $12 billion,
the possibilities for growth are immense. Ballou noted that travel agencies
sell about 50 percent of this higher margin vacation travel, of which
the rest is sold directly by suppliers to consumers. The inbound travel
vacation market presents another opportunity, he said, for up to $8
million in vacation packages.
Due to direct selling opportunities afforded by
the Internet and 800 telephone exchange, the travel industry value chain
has dramatically changed, Ballou said. Travel agencies must embrace
these newer technologies to sell suppliers' products, or suppliers will
do it themselves, he said. "There will no longer be a rigid distribution
channel; there will be multiple choices available to consumers, to agencies,
to wholesalers, and to capital goods suppliers."
The future winners in the travel industry can be
characterized by developments ongoing now, Ballou noted. Organizations
are undergoing consolidation for strategic purposes, which will also
provide operating efficiencies. They are building brand strength, and
establishing alliances with travel agencies and other vendors. Because
technology presents an opportunity to double or triple the margins for
most travel industry segments, Ballou said winning organizations are
optimizing technology and focusing simultaneously on the real needs
of both their customers and vendors.