$50m NZ agency set to become travel.co.nz

One of the country's largest independent travel agencies has been acquired by Australia's travel.com.au and is poised to launch a new online identity.

One of the country's largest independent travel agencies has been acquired by Australia's travel.com.au and is poised to launch a new online identity.

Advantage Travel Systems (ATS), the holding company for the Jetsave agency, which has annual sales of around $50 million, will launch travel.co.nz with a major marketing campaign in February.

With the crowded local travel industry facing a crunch as airlines cut commissions - the agency margin on trans-Tasman travel was slashed from 9% to 5% - ATS managing director Greg Southcombe says he began looking for an investor early this year. He says he got a "very prompt response" when he contacted travel.com.au in May. The merger-acquisition was completed in September.

Following travel.com.au's lead in providing the "booking engine" for other Web travel storefronts, such as Yahoo! and Excite Australia, travel.co.nz will also partner with TV One's expanding Web business and be part of the Norcross Group's e://volution procurement portal. Discussions on a potential partnership with FlyingPig are in progress.

Travel.com.au was formed in 1997 by a group of experienced travel agents, as a dedicated Internet travel agency. It closed its only two bricks-and-mortar outlets before a successful IPO this year and now concentrates solely on Internet sales.

Chief operating officer Bill Gair says the company represents about 2% of the overall Australian travel industry and expects to reach $100 million in Australian sales alone in the year to June 2000, booking both general travel and accomodation and specialist categories, such as business, gay and ski travel, from its Website.

Most of the applications used by the new travel.co.nz - for both the Web and for internal productivity - will be hosted in Australia. The Australian company has standardised on browser-based apps.

The New Zealand company will also take up travel.com.au's distinctive road-sign branding for the local launch - but Southcombe says that acquiring the travel.co.nz domain from its previous holder cost "substantially" more than the $150 the Australians paid for theirs in 1997.

But the intellectual property will flow both ways. Southcombe says a substantial part of his company's value to travel.com.au lay in its pioneering of a "brokerage" model for its consultants, based on the real estate industry.

Since taking the helm of his family business in 1997, Southcombe has combined the broker model with an emphasis on teleworking, to the point where 36 of his company's specialist travel consultants now work remotely, connected by phone and a virtual private network for data.

This model, which Southcombe says offers the flexibility to bring back into the fold skilled consultants who have left work to raise families, and find 9-5 office hours difficult to keep, is already being adopted by travel.com.au, which signed up its first broker last week.

Southcombe says the local brokers were initially wary of the idea of a self-service Website, but had warmed to it when it was explained.

"More than 80% of the travel they handle is international. That does tend to be more complex and to need human intervention at some point. Even with very simple point-to-point business, somebody has to manage the relationship, and that's where the broker has a role to play.

Brokers will each have their own "personal Website" to which they can direct clients.

Although ATS will migrate its branding to travel.co.nz, Southcombe admits that one of Jetsave's major niches - the Asian market, where customers tend to want to pay cash and don't use the Internet - will stay offline for some time yet.

While the company will also take up travel.com.au's Corporate Connections brand for its business travel offerings, Gilpin, the corporate travel agency acquired by ATS early this year, will keep its own brand for a short time.

Southcombe says that in addition to its aim of becoming the country's number one Internet travel agency, travel.co.nz will be exploring new niches.

"It's very early days yet but we've set up a fledgling specialist unit that deals with the disabled traveller. That's a huge market - in fact it's worrying when you realise how many people there are in that market and how poorly they're catered for."

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