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Internet competition fuels agency franchisors. (Agency Franchisors).

Article Excerpt
The Internet in 2002 occupied a huge space in the collective mind of franchise travel companies, both as an opportunity to expand services to corporate customers and also as a threat to their businesses.

Though franchisors embraced technology to provide online self-booking and fulfillment capabilities, the growth of such online travel agencies as Orbitz and Expedia threatened to siphon corporate and leisure travelers seduced by transaction fees as low as $5. Knowing that matching the Internet companies' transaction fees dollar for dollar is a likely recipe for quick financial ruin, franchisors instead have chosen to arm themselves with higher service levels, arguing that the benefits of corporate reporting, emergency services and simpler methods of changing reservations outweigh higher fees.

Several franchisors have contracted with one or more outside technology firms to provide franchises with online self-booking capabilities, allowing travelers another functionality already provided by the online agencies as well as the mega agencies.

Still, not every change to the franchise business revolves around technology. A few franchisors have reorganized their business models, finding more narrowly defined niches for their franchise agencies to serve. Those changes range from directing a heightened concentration of resources to small and midsize corporate accounts to all but abandoning the corporate market.

Though the general slowdown in corporate travel has limited franchisors' opportunities for growth, they remain confident that a turnaround is at hand, it not already beginning, and they believe they will yet thrive, even in a vastly changed marketplace.

Carlson Wagonlit Travel Associates has continued a drive to segment its product offerings, said franchise division executive vice president Roger Block. Along with Results Travel, its brand of smaller, less technologically sophisticated agencies, Carlson has developed specific software and products for larger, multiple-location and corporate-focused franchises that allow for more in-depth and integrated technology services for corporate clients.

"We have to segment product offerings instead of insisting on one type of franchise for all agencies, whether they're 100 percent corporate, 100 percent leisure, a startup or a $200 million agency," Block said. "Otherwise, the pool becomes clouded regarding services and products."

Carlson's ARC-reported gross air ticket sales, number of franchises and number of franchise locations all increased in 2002, an achievement no other agency franchisor can claim.

"We've migrated a number of agencies to Results Travel, made Carlson programs more in-depth and added agencies on both the corporate and leisure side," Block said, adding that the company increased the average...

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