<B>Tzell Buys Journeycorp</B>
By Megan Hjermstad
Tzell Travel Specialists last month announced it acquired Journeycorp, creating the largest independent agency in New York. The two New York-based agencies will retain their unique brands while combining resources, technology and sales volume for supplier negotiations.
"We are getting bigger in the heart of our company," said Tzell owner Barry Liben. "We are in a very lucrative market and are building our niches and strengthening what we have."
Both agencies have favorable leases and will continue to operate two separate facilities. Jerry Behrens, vice president of business development for Tzell, said both facilities allow for expansion and growth. Journeycorp currently has room to accommodate 40 more agents and Tzell, which recently took over a new floor in its midtown office, now has room for an additional 50 agents.
"Here in Manhattan, getting space at a good price is tough," said Behrens. "Adding a number of agents to the space in New York will not be physically possible. By necessity, new acquisitions will stay at their own location."
Tzell, which earlier this year completed two acquisitions in the Boston area and one acquisition in New Jersey to add to its Beverly Hills office, is looking at opportunities in other markets as well. "It is an area of significant growth for us," said Behrens. "I wouldn't say we have plans, but we are approached by people all the time."
Both Tzell and Journeycorp are sizable agencies, but cater to small accounts. Tzell, which this year anticipates air sales of $250 million, gets 80 percent of its business from corporate accounts. "Our bread and butter is the corporate account," said Liben.
Tzell clients on average are a half million dollars in annual air volume and Journeycorp clients on average are $2 million in annual air. "We don't seek, look or even bid on major accounts," said Liben. "We have no interest in the $20 million to $30 million account. We look for smaller accounts." Liben said even a $5 million account is an exception and its largest account probably is $10 million.
Behrens said Tzell is on the verge of landing a couple of name brand accounts to add to its roster of better known clients that include Donna Karen, Reuters and a division of Sony Music. As a result of the Journeycorp merger, Tzell is hoping to bring on some other new corporate accounts in the range of $2 million to $10 million.
The company, which has never advertised, has built all of its business upon word of mouth referrals. Tzell now refers larger corporations to New York-based Advanced Travel Management, with which it formed a joint venture a year ago (BTN, Nov. 1, 1999).
"We were asked to bid on the Deutsche Bank account. We had no desire to handle a $22 million account, so we brought in Advanced," said Liben. "It is a perfect blend for us." Liben said in return, Advanced has referred at least five smaller accounts to Tzell.
Tzell has been working on joint projects with Advanced, and drawing on Advanced's technology expertise. "We are getting to where we need to be on that front," said Liben. "We don't want to lose an account to someone because they have better applications than we do."
Tzell also is working hard to retain its agents, 80 percent of whom are independent, commissioned agents. "Getting qualified travel agents--not just robots on a computer--is the hardest thing in the world," said Liben. "We try to attract the best, brightest commissioned agents. The heart and soul of Tzell and where the success has been is the people. We have worked very hard to make people feel responsible and involved in their own lives."
Liben is most proud of the fact that no commissioned agent has ever voluntarily left Tzell. He attributed the low attrition rate to the fact that Tzell agents are allowed to operate independently and develop direct business relationships with clients.
Liben said his agency, like every other travel agency, has had to be creative in dealing with clients since it began charging clients fees. But he said the move to agency fees was a positive one for the industry. "The commission cap changed everything, psychologically and financially. It was a huge shock to the real veterans of the industry that the airlines would do that to travel agencies. The financial ramifications came after that. I think the wake up call was a good one," said Liben. "Some of the things travel agencies have done for free are absurd. These things went on for years and years out of a complacent attitude and lack of entrepreneurial strategy."
Liben said Tzell is working very intensely with its agents and clients, preparing as if commissions will go down to zero. Ultimately, he said, it comes down to providing quality service. "If you do the hard stuff, the fees will come," said Liben. "If you find an agency that will work for free, you won't get what you need.