Six Agencies Combine Clout

<H1> Six Agencies Combine Clout</H1>By Stefani C. O'Connor

<I>New York </I>- Six competing East Coast corporate travel agencies with an aggregate sales volume pegged at $800 million joined forces Sept. 1 to form a consolidated travel management company designed to leverage their combined economic clout and individual expertise in the corporate market.

The new entity, which will do business as Tri-State Travel Association, L.L.C., consists of Austin Travel, Fugazy Travel and Sea Gate Travel, all in New York; Robustelli World Travel and Worldtek Travel, both in Connecticut; and Stratton Travel Management in Franklin Lakes, N.J.

While the agencies will not jointly pursue corporate business, they will seek to drive down clients' costs by consolidating both buying power and the services they provide to customers.

With a combined client base of about 4,500 corporations ranging from manufacturers to the entertainment industry, the agencies have begun assessing how they will streamline their services and operations.

"There are some synergies we can gain by consolidating efforts in particular areas," said Paul Salvatore, president of Stamford, Conn.-based Robustelli Travel. "We're particularly looking at purchasing, automation and technology. Anywhere we can cut costs, gain synergy and go forward to stay in the game is how we're going to use the association."

Areas under consideration for consolidation include back-office systems, e-mail booking processes and development of a central reservations system. The agencies also expect their clients to benefit from single sourcing of services and decreased costs obtained through combined purchasing. At present, neither equity exchange nor shareholding by the agencies is involved in the new venture.

The group has brought in Ken Bennett, a former regional sales manager for American Airlines, to oversee the association as executive director. Stratton president Paul Leyh will serve as president and chief operating officer. Both will operate out of Stratton's New Jersey office.

A team of senior executives representing each agency is in place to coordinate their firm's operations and ensure cost efficiencies for the new entity. For the present, each agency will retain its own identity and manage clients via their individual reservations centers.

While still in the formative stages, the organization's shape will be customer driven, Leyh said.

"At this point, we're looking not only from our viewpoint but from our customers' viewpoints," he said. "We're looking to leverage services so there's more strength for the buyer when we go to negotiate fares or hotel rates. When you're negotiating as a $800 million entity as opposed to a $90 million entity, it definitely gives you a lot more clout."

Leyh stressed, however, that while Tri-State would use its size going up against mega agencies in bids, it would not be a "consolidated version of American Express."

"Where it makes sense, we are going to combine our resources, processes and services, but each of the agencies has unique characteristics that can bring that value-added to the client," he said. "We are going to maintain those independent strengths."

By way of example, Robustelli's Salvatore said that if two of the six agencies found themselves receiving RFPs from the same client, they would alert each other and see how they could parlay their branded expertise-such as his agency's video services or Sea Gate's technology-under the Tri-State umbrella, or, if faced with a mega agency, perhaps combine in the bid process.

"You never used to talk to your competitor," Salvatore said. "We couldn't sit in a room and discuss air fares or override deals without being indemnified by the carriers. We wanted to avoid that situation. Perhaps combined, we can all help each other.