<FONT SIZE="+3"><B>Corp. Starts Agency...
</B>By Cheryl Rosen
<I>Salt Lake City </I>- After reviewing the final bids for its $3 million air-volume account, Franklin Quest Co. has decided to join a tiny but significant group of corporations taking full control of their travel destinies by launching an agency of their own.
This week, the nation's largest time-management firm is moving its business to Franklin Quest Travel Inc., its new subsidiary, accredited by ARC as a full-fledged travel agency and headed by longtime Franklin Quest travel manager Barbara DeBry.
Surely Microsoft, which last week launched its Expedia online travel booking site, will be marketing itself on a more massive scale (see story, Page 1). But insiders say the possibility of using public Websites to draw the outside customers mandated by ARC makes it decidedly easier for companies with significant customer bases to consider the option.
Even while ARC claimed that only "an isolated couple of companies" have taken the do-it-yourself route, insiders see a mini-trend developing as they compare those that have done this in the past five years-McDonnell Douglas alone comes to mind-with the list for 1996: Microsoft, Charles Schwab, Universal Studios, Southern Living Magazine, Polo/Ralph Lauren, Advanced Micro Devices.
"Corporations have been looking seriously at this since the commission caps pushed the corporate agencies to start charging fees," said Annandale, Va.-based consultant Donna Conklin, who helped both Charles Schwab and Franklin Quest through the ARC accreditation process. "I have two clients now going through the process, and I've had five or six who got approval this year, and 20 or 25 more who have looked into it. But you have to be careful, because you lose any overrides you are getting from your agency. Several companies have sat down and looked at the figures and seen they are not going to save any money."
In order to come out ahead, Conklin said, travel managers need to follow both the letter and the spirit of the law, soliciting and delivering a real customer base. And that's just what Franklin Quest means to do-by advertising its travel-agency and meeting-planning services in telephone books nationwide, by making the services accessible over the Franklin Quest Website, and by marketing them to the 5 million users of the Franklin Quest Day Planner. That product is sold and marketed through 90 retail outlets nationwide, and through company offices in London, Toronto and the Far East. And, of course, Franklin Quest will use the agency to book travel for its own 3,000 employees worldwide.
DeBry expects the new arrangement to bring in increased commissions of 18 to 20 percent over those the company was getting through its agency, and to draw better up-front discounts from suppliers as well. Already, she has consolidated all CRS bookings with Worldspan, where previously the company used both Worldspan and Sabre, in return for a negotiated discount from Delta Airlines, a Worldspan owner.
But the transition is not without costs, especially in the beginning. There were fees and time involved in setting up a formal corporate subsidiary-including the naming of officers and the posting of bonds-and for a consultant to guide the company through the ARC accreditation process. The staffing will include DeBry, who will now manage the agency as well as the travel program; three full-time transient travel counselors and one part-timer, one full-time meeting planner and one administrative person to focus on reports and quality control. But Franklin Quest's on-site was always staffed by its own employees; only the administrative position is new.
There also was a time commitment involved. The committee that proposed the plan to senior management originally was formed to evaluate travel agency bids, but "since we were already doing our own vendor negotiations and providing our own staff, it became obvious as we drilled down into the financials that there were not a lot of value-added services an agency could provide," DeBry said. "So we did some spreadsheets, and every time we ran the numbers we said, 'oh, this makes sense.' "
Then came the ARC process. "This is a new thing for ARC, and they are being very careful," DeBry said. "It usually takes 90 days for an agency to get approval, but it took us about four months. They have a lot of rules that no one challenges-you just have to follow them."
ARC president David Collins agreed that the agency is indeed being careful in attempting to accredit only those companies that truly intend to get into the travel agency business, as opposed to those that may simply be trying to use their own ARC number to book internal travel.
Collins said that while at one time ARC mandated that 80 percent of all travel booked by an accredited "agency" come from outside customers, that has not been the case since the mid-1980s. But despite the fact that there is no mandated mix of internal versus public business booked by an ARC-accredited agency, the company still must convince the agency of its intent to be "open to the public."
"Our mission is to accredit sellers of travel on behalf of the airlines," Collins said. "If the ABC Corp. comes to us and asks for accreditation, we ask for a signed affidavit from its corporate officers stating that they are going into the business of selling travel to the general public."
Making travel agency services available on public Internet sites, as Charles Schwab is doing and as Franklin Quest plans to do, meets the requirement, whereas offering services only on a private corporate intranet does not, Collins said.
Meanwhile, as her new travel agency business rolls out this week, DeBry is equal parts excited and terrified. "I know I'm being watched on a lot of levels-certainly by my own company, since I've spun off a division, but also by other corporations and agencies in the city and in the state, and now by the press," she said. "It's a big commitment, and you need 100 percent support clear to the top of your organization. But it's also a great opportunity. This wouldn't work for every company, and many won't even want to try it. But it's another option for travel managers to consider-and we think it will work for us.