By Kathleen Cassedy

Just 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.