Pioneering a New Business Model
Tuesday, February 28, 2007
Selling a service: He turned a college experience into a $110 million business.
MAITLAND -- Randall Warren has been entrepreneurial almost as long as he can remember.
While still in high school, Warren set up a small business selling electronics such as TVs and radar detectors. It was through that business that he made contact with his dad's travel agent who, in turn, offered him a chance to sell tickets and get discounts for himself.
"I tried it and liked it," says Warren. "It seemed like a really easy way to help others and help myself."
That budding entrepreneurial spirit really came alive a few years later after a chance request while in school at American University. There, one of Warren's classmates asked him to help her book travel plans over the Internet for spring break. Pretty soon, young women were lined up 20-deep out the door to their dorm, says former roommate and current business partner Michael Gross.
"It was then I decided I wanted to be in the travel business," says Gross with a laugh.
Today, that inauspicious beginning has given birth to a $110 million business -- Global Travel International Inc. -- that boasts of 35,000 independent agents in 72 countries, 140 staff members at its Maitland headquarters and a second office in Boca Raton, where Gross, president and co-CEO, works out of.
"I'm not sure I made an effort to specifically go into the travel business," says Warren, 37, chairman and co-CEO. "In fact, I really tried to get out of it, but people wouldn't leave me alone, so I figured what the heck. Obviously, that proved to be a good decision."
Overcoming obstacles Although Global Travel has grown into a multimillion-dollar business since being established in 1994, that's not to say it hasn't faced a number of challenges along the way.
One of the first challenges Global Travel faced had to do with its business structure, in which the firm's 35,000 independent travel agents pay a monthly membership fee that ranges from $29-$59 from which they can have access to travel discounts, upgrades and other deals as a travel agent.
Because Global Travel has no minimum sales requirement for agents, many use their membership status for personal or business travel, or they receive commissions for booked travel transactions.
"The idea is to give people a business opportunity," says Warren. "It's not a get-rich-quick scheme. They can do as little or as much as they want with it."
That business model -- pioneered by Global Travel and others -- was targeted in 1998 when the American Society of Travel Agents asked the Federal Trade Commission to regulate travel credential sales and adopt travel standards. The FTC decided, instead, to only review companies on a case-by-case basis.
Additional obstacles came in the form of unexpected events: the Sept. 11, 2001, terrorist attacks, which crippled the travel industry for a period of time; and the SARS outbreak a few years later in Asia.
But despite layoffs of nearly 70 people after Sept. 11, Global Travel now has grown its staff to double that number. Ironically enough, notes Gross, it was the firm's business structure that helped it compete more effectively when travel agencies as a whole began to see business drop off.
"They were the forerunners of what's become the new model for home-based travel agents," says Gary Sain, chief marketing officer and partner at YPB&R. "They had the foresight to see a niche that was going to boom -- and they took advantage of the opportunity. Their numbers speak for themselves now."
Future growth Warren, for one, hopes to make those numbers "speak" even louder in the near future.
Among his goals for the 12-year-old company: to grow to a half-million travel agents and a billion and a half in travel sales in the next five to 10 years.
Sain, who first came into contact with the firm when he was senior vice president of the Big Red Boat cruise line, says Global Travel shouldn't have any trouble continuing to grow. After all, he points out, "Consumers want choices."
"Expedia does well, but they sell a commodity, or transaction," Sain says. "When the trip is more of a risk, that is, the person looking to travel may need additional insight into where they are traveling, travel agents can provide guidance on those details. In Global Travel's case, their members are educated about the industry and can offer clients that expertise."
Pat Funk, executive director of the Association of Retail Travel Agents, a 3,000-member trade association based in Nashville, Tenn., agrees.
"While the travel industry has evolved over the years due to the popularity of the Internet and cutbacks on airline commission sales, there is still a big opportunity out there for business," Funk says.
"Global Travel is unique in what they do -- they brought a new way of doing business to the industry -- and it seems to be working for them."
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