Are mega-mergers good news for smaller agents?

Thursday, 24 Oct, 2003 0

The acquisition of Rosenbluth Travel by American Express does not mean the impending demise of small and medium travel agencies but instead opens the door for them to get more corporate travel, says Kevin Mitchell.

Mr Mitchell, chairman of the Business Travel Coalition, told TravelMole: “Bigger is not always better. Regional agencies can offer relationships with suppliers and high service levels that no one else can meet. And on a fee basis, they can be half as expensive as the mega agencies.”

Mr Mitchell made the point that the national trend for the past 20 years has been to look to the very largest travel management companies.

“The rationale behind that trend was that the largest agencies would offer the better data, superior customer service and much better prices. And none of those premises ever panned out,” he said.

Small and regional companies often offer higher levels of service, have better relationships in local markets and often offer lower prices, he said.

Mr Mitchell said he expected the acquisition to lead to worsening service levels and perhaps higher prices.

Some travel managers fear the acquisition could lead to higher prices and a reduction of benefits for corporations.

However, executives of Rosenbluth and American Express denied any claims of declining service. They said the combination will enable them to provide the technology solutions, services and choices that corporations want.

Smaller and medium size companies that want to compete will have to position themselves somewhere between the large giants and the high-tech companies such as Orbitz, Expedia and Travelocity, according to Mr Mitchell.

His advice to smaller and medium-sized companies: “I think the value proportion has been there all along. But they (agents) have to get out and market it and differentiate themselves. They have to tell their story.”

Customer service will become even more important in the future. “That will be the battleground,” said Mr Mitchell.

He termed the acquisition an “opportunity for travel agents to build a new sandbox.”