Your Business: Travel brokers forge ahead in brave new world

Mike Southcombe (L), and David Wallace say their Travel Managers business is 'flavour of the month' these days. Photo / Paul Estcourt

Booking travel online, low margins and technological developments in the travel industry have changed the way New Zealanders travel forever.

The altered environment has also opened up new pathways for the way travel agents can work.

Michael Southcombe, with his father John, the owner of Jetsave Travel, (renamed travel.co.nz in 2000) had fought the battle with the Travel Agents Association of New Zealand (TAANZ) to have broking accepted as an employment option for selling travel.

In August 2002, Michael Southcombe and David Wallace set up Travel Managers, believing the market had a gap for a specialised network of brokers.

Travel Managers now has an annual turnover of $60 million and has launched more than 100 travel brokers across New Zealand.

By the end of this year, the turnover will be closer to $70 million with a further 20 brokers.

Wallace, the chairman, and a successful broker for Travel Managers in his own right, helps with the recruitment of brokers and liaising with existing brokers. Southcombe, the managing director, is in charge of day-to-day running of the business based in Auckland's High St. His father, John, is an advisory consultant.

The Travel Managers brokers are small and specialised. Eighty per cent of them are women, most of whom work from home. Travel Managers has offices in Auckland, Wellington, Dunedin, Napier and Hastings. They have a well-established line of clients, both corporate and consumer/leisure. The brokers are from and cater to several ethnic communities, including those from China, Indonesia, the Middle East, the Pacific Islands, South Africa and Nepal.

"The different nationalities provide a really great addition to the culture of the company," says Wallace.

The common link with the travel brokers is they deal in niche areas and they have an established client list.

One of the group's most successful brokers is Carole Mills, a world marathon specialist who runs tours at all the main marathon cities. Another is Kylee Flegg, who set up the women-only travel company, Travel VUDA, two years ago.

"We want experienced travel agents, who have lots of clients that they bring with them. They are profitable from day one, we are not out there cracking the whip, they are self-motivated," says Wallace.

They have to have worked in the travel industry and are able to prove that they have a niche.

"We are not in the business of training people to get into the industry."

In the beginning, "We weren't well thought of because we were not part of a big organisation. Now we are flavour of the month," says Wallace.

Travel agencies and airlines are setting up their own broking branches now, says the chairman.

The deal between the senior brokers and head office is there is a 90:10 split. The brokers get 90 per cent of what they earn, Travel Managers get 10 per cent. For their 10 per cent cut, they pay for the brokers' TAANZ bond.

"We take responsibility for TAANZ membership and bond, client fund accounting through our Tramada system, negotiations with principals and allow more time for selling."

As well as the 10 per cent from its brokers, Travel Managers has other avenues of income in this competitive market.

"We get a percentage given back to us by airlines and wholesalers.

"It's very hard to set up your own [travel agency] by yourself as margins are so low in our industry, you've got to push through a lot of volume," says Wallace.

To give brokers a sense of belonging, Travel Managers has a conference once a year. It will be at the Copthorne Waitangi this year.

Top-performing brokers are taken on an overseas trip.

Says Wallace: "We want to make sure that we maintain a family type of atmosphere, where everybody felt part of the operation."