Franchise For the Future - Travel Agent Magazine Apr-24-2000


It might be best known for its innovative store-within-a-store network of 50-plus agencies located in Wal-Mart Supercenters throughout the country. Or maybe it's the attention-grabbing HaggleWithUs.com and RezConnect booking products due out this quarter that have brought the global franchisor into the forefront of the travel industry. But getting at what makes the 450-location Internet travel provider Etravnet.com a success requires digging deeper into the the company's philosophy on management and franchisees.

According to Stephanie Abrams, the company's Executive Vice President, the future will see agencies being repositioned as customer-service fulfillment centers for their Web businesses. "The Web will continue to be a major source of information and booking capability, but the future is now," she says.

Founded in 1982 as the Travel Network, the company went "global" in 1992, changing its name to Global Travel Network (GTN). In September 1999, it was acquired by Hauppauge, NY - based Playorena, renamed Etravnet.com and began trading a week later under the symbol ETRV.

Today Englewood Cliffs, NJ based Etravnet.com produces more than $1.5 billion in sales annually and has more than 90 internationally franchised GTN agencies and master franchisees on four continents, representing 22 countries as well as the Caribbean.

Rated first among travel franchisers in North America by Income Opportunities magazine in April 1999, the company has provided franchisees with a competitive edge, and impressive marketing and customer loyalty programs since its inception. This marketing presence was expanded with recent Web site development, providing interactive travel booking capabilities and special savings resulting from Etravnet.com's enormous buying power. Each of its franchisees has a home page linked to the company's Web site, with access to deals and booking engines. The company also has differentiated its Internet presence by providing offline customers with the opportunity to click into one of its retail agency locations to work with a professional travel consultant.

Etravnet.com President and CEO Michael Brent considers the company's biggest accomplishment to be its ability to take its network brick-and-mortar agencies and turn it into click-and-mortar franchises. Because his company has always been able to spot emerging trends, he says, Etravnet.com began investing in technology three years and a half years ago (when it was Global Travel Network) and has always focused on the leisure side of the business, encouraging member agencies to get into e-commerce.

Now many of those agencies are experiencing big online success. Chris Nicholas, a franchisee in Chesapeake, VA., since 1992, earns between $3 and $10 million annually from new clients on {www.travelnetwork-va.com}, the website that his agency has had in place for two years.

Transforming Technology

Brent says that HaggleWithUs.com and RezConnect, Etravnet.com is the first travel company to offer online reservations for restaurants, hotels, and theaters in real time. HaggleWithUs.com allows online consumers to select a participating vendor, the type of product they want and the number of days reserved, and propose a price. The service lets them choose their travel product and negotiate in real time through technology that converts the Internet request into an immediate computer generated call to the reservation desk. From there a bidding process begins, enabling the customer's online bid to be accepted or negotiated in real time. The hotel reservation agent has the option to accept, stand firm or make a counteroffer. All negotiations are capped at three consumer bids. Upon accepting the deal, the consumer receives a confirmation, and the nonrefundable transaction is charged to the client's credit card.

When the online service becomes available to agents in this quarter, brand-name hotels and car rental firms as well as independent properties in the U.S. and abroad will be included. Kemwel Holiday Autos has already been appointed as the car supplier for all international business. By the middle of this year, Etravnet.com hopes to expand this service to include active bargaining for cruises, tour packages, and airfares. The company is also providing private-label booking services for enSpot.com , searchdice.com, bizsupplies.com and residentpage.com.

The RezConnect service enables customers to make reservations at the 100,000 participating restaurants in more than 7,000 cities worldwide found in RestaurantRow.com's database, using Etravnet.com's net-to-phone technology. The user is able to log on through any of Etravnet.com's agency sites or its corporate site, and then Rezconnect confirms the request in real time or offers alternatives. Travelers can search for a restaurant in the destination city from the extensive database of descriptions, which includes menus, location maps and dining features. Etravnet.com's patent pending Internet booking engine automatically phones the restaurant with a computer-generated voice message. The format allows customers to immediately know if a reservation is confirmed, so they can select another date, time or restaurant if necessary.

Brent says these products are making it possible for clients to arrange their whole travel experience - hotels, rental cars, theaters and restaurants- online with immediate confirmations, before arriving at the destination. Franchisees can earn a portion of the 12- to 15-percent fees clients pay to use these services found on their Web Sites.

According to Ori Klein, the company's chief technical officer and in charge of a team of 20 in the IT and production departments: "The most important part of all this technology is making the process user-friendly, and on site practical and fun." He adds that agents appreciate the fact that they can earn commission from these online products whether they are sleeping, awake, or at their computer.

Anise Morris, a $2-million-producing franchise in Birmingham Ala., since 1994, says that once these products are up and running the earning possibilities for agents will be limitless as the company moves further into the online travel market. Says Morris, who joined the franchise because of the group 's flat-fee structure: "My future is going to be bright as long as I am affiliated with Etravnet.com - a leader in technology and customer service." Morris adds that just about every client who comes into her store mentions her web site. She is therefore interested in adding whatever booking capabilities Etravnet.com has to offer.

Abrams says that the opportunities extend to small and large suppliers as well. "This is an opportunity for us to bring this technology to restaurants and hotels that don't have toll-free lines, and give clients exposure to to all these additional products in the marketplace," she says. "We believe HaggleWithUs is the next level of Priceline.com because it is a better model - you know your results in seconds, and our system combines online and offline capabilities."

Brent points out that Web needs to be considered differently because franchisees are now not limited by geography. The result of all this new online traffic is that there's more business to be had, but fewer sophisticated agents to handle all of these clients. "We see ourselves using this technology, the Internet and our financial resources to make ourselves a leader in the online travel business," he says.

Abrams adds that the company wanted to be able to give its agencies the opportunity to have the sophistication of all the Etravnet.com has to offer - the bells and whistles, plus the booking systems for air, car, hotel, cruise and tours. Agents must use the efficiency of the Web and couple it with the buying power and reality of a storefront, she says.

"We are essentially creating a department store of information in a hospitality site so that people will have a reason for coming back," Abrams explains. "Plus we want to make it easy for consumers to reach the bed-and-breakfasts or the off-the-beaten-path hotels that don't have huge reservations centers."

Abrams adds that the company's goal is not to be a "boiler room of wires" connecting people to a destination, but to provide the kind of service consumers want, knowing that there are real people backing up these products and services. She says that since the average person only travels a few times a year, agents need to position their websites as places clients can go to frequently because information is constantly changing. Static bulletin boards have no place in the interactive world, she says.

Stores Within Stores

But the physical location of a storefront - be it online or not - is just as important in attracting business, and it was this philosophy that led to a partnership with Wal-Mart. Etravnet.com opened its first agency inside a Wal-Mart Supercenter in September 1996, and it currently has more than 50 locations around the country, in 15 states. Approximately half the locations are owned by veterans of the travel industry. Many of these owners opened their agency as a branch of their existing business, while others moved their business or substantial outside sales force into the store location. The 40,000 to 60,000 shoppers who come into Wal-Mart stores weekly provide a captive audience for the agencies which are situated near the front entrance where anyone can see them.

Retailers say that the attraction of the Wal-Mart name and its self-contained supermarket brings in every segment of the community into the store. Since many people shop at Wal-Mart, these agency locations have access to their entire surrounding areas.

With 20 percent of its present locations inside Wal-Mart Supercenters, the company projects opening another 35 locations in 2000, and it plans to focus their interiors to merchandise specific vendors as part of a tightening of their preferred focus. The next project is to create a stronger sense of distributorship between specific preferred suppliers and Wal-Mart locations through dramatic permanent sales displays and daily marketing focus on these product sin the stores.

Says Brent: "Our relationship with Wal-Mart is strong and growing. We consider the decision to bring Travel Network into the Supercenter locations a true testimony to the value and service of our franchise system delivers to both customers and franchisees. We are really experts in this concept and are looking to develop more stores of this type in a variety of department stores similar to Wal-Mart."

Maria Caldarella, manager of an agency in a Wal-Mart Supercenter in Orlando, who has been in the industry for 13 years, says the biggest benefit "is being part of a large association that is a household name and gives us better buying power: Caldarella thinks the company will continue to move forward into the online travel market, as well as grow its store-within-a-store concept, because the time-strapped people of today want one-stop shopping. "The good years are still ahead - you just have to hang on, build clients and be with the right people," she adds.

Looking to the Future

As for what lays beyond the launch of HaggleWithUs.com and Rezconnect products, the company is looking forward to several new initiatives. Last spring Etravnet.com awarded master franchise rights to Servizona, a chain of 31 agencies within locations throughout Spain, and the Canary and Baltic islands, for franchise development in Spain, Portugal, and Morocco. Etravnet.com has also forged a strategic relationship with Gogo Worldwide Vacations, a leading wholesaler of travel packages. Liberty Travel, a major agency chain affiliated with Gogo, owns an 8-percent interest in Etravnet.com though an investment made prior to the Playorena/Global Travel Network merger.

According to Brent, the company's improved access to capital markets enables it to enhance its brick-and-mortar strategy. He says that the company is positioned for further acquisitions, partnerships and initiative to increase sales volume through its Internet platform. Says Brent: "We will continue to enhance products offered though our website , which was rated behind Expedia as the eighth -best site in the travel industry by Gomez Advisors in 1999. Gomez compared our business model to Schwab."

In addition, Etravnet.com recently announced partnerships with GoCancun.com and VisitCabo.com to have rezconnect installed on each of those sites. Adding Rezconnect to these locations enables consumers to make hotel reservations at more than 150 properties. Etravnet.com executives say that they are gaining interest from similar suppliers and destination sties to add the interactive reservation engine to their websites.

At present, Etravnet.com is involved in establishing an Internet call center through [www.etravnet.com] that directs special-attention leads out to member agents according to their availability and expertise. The company is working on establishing private-label Web sites that drive traffic to its franchisees. For this project, the franchise is acting as the fulfillment house for non-travel companies that have and Internet presence.

It is also trying to establish partnerships to offer travel to these companies. For example, the company is working to partner with alumni associations and upscale magazines.

Says Brent: "We think all our new technology positions our company well for the changing travel industry. Plus we have designed a better mousetrap than anyone in the marketplace thus far."

According to Abrams, the future is all about technology. "We are pioneers on the fringe of explosive opportunities in the travel industry, " she says. "We are providing the technological wherewithal to give our people the power of the Web and provide clients with the boutique services of a caring, loyal company." So as Etravnet.com forges though the wired world of travel, it seems to uphold what matters most to agents and clients alike.