Woodside Cuts Agency Fees

<H1> Woodside Cuts Agency Fees</H1>By Stefani C. O'Connor

Bethesda, Md. - A move to reduce dues for its North American members may be just the tip of the iceberg for Woodside Travel Trust as it spins new strategies-including potential equity interest in airline and cruise products-to cope with the changes in the travel industry.

The 20 percent cut, rolled out during the 135-member consortium's annual meeting in San Antonio, Texas, drops monthly dues to $440 for agency partners with sales under $5 million to $1,280 for those with sales over $30,000.

It is the third such downshift in 10 years. The first was sparked during the 1986-87 air fare wars; the second in reaction to the Persian Gulf war in the early '90s. And although the commission cap of 1995 has had a major impact on the agency community, Woodside CEO Ivan Michael Schaeffer said the fee rollback had more to do with making the consortium more attractive to prospective members than coming out from under the cap.

Key to that premise are recent decisions by American Express to raise its fees by as much as 40 percent for representative agencies beginning midyear, and a perceived shift in focus by Carlson Wagonlit Travel toward the leisure market.

"We are now facing an unprecedented number of inquiries," said Schaeffer. "There's a fair amount of uncertainty about the finances of the industry. People are scared. We're in a period I would refer to as 'disequilibrium,' and whenever you have that kind of dramatic change in a market, it moves from competitiveness to hyper-competitiveness."

The CEO pointed to the makeup of his organization as another factor driving inquiries. All Woodside partners are shareholders in the operation, but they do not take dividends, which are taxable. Instead, Woodside lowers dues, and profits are plowed back into products and services. "We then provide those products and services at no cost to our agencies; it becomes part of their base fee," he said. "Unlike American Express or Carlson, we have no need to derive profits for either a representative or a franchise program."

In 1995, a year Schaeffer characterizes as one of "phenomenal success," Woodside developed two software programs for its partners: PRS (Preferred Reference System), a productivity and quality control tool that operates on an agent's reservations systems; and Directory View, a PC-based version of its worldwide hotel directory and travel guide.

During that time, 17 partners also joined Woodside, seven in the United States and 10 from other countries. Schaeffer said he was not sure if the reduced dues would be extended to the international partners, who already pay anywhere from 50 percent to 75 percent less than American members because "our products traditionally have had more applicability in the United States than they did overseas," said Schaeffer. He added that the new software technology would be extended to the global partners.

Reflecting Hard Times

"We timed this dues cut to reflect the reality that there were some agencies that were having more difficulty and really needed to focus more on each line item in their budget," Schaeffer said. "If the international agencies were suddenly to find themselves in the same arena as our North American agencies, I think we would be inclined to cut their dues."

"The response of the marketplace to the commission caps has been undisciplined, and only those people who understand the economic forces are coming out well," said Schaeffer. "If ever there was a time that called for proactivity, this is it.