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Bell tolls for endangered travel agents

Friday 31st March 2000

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Greg Southcombe Greg Southcombe
Projected value of web-based sales by 2002
By Nicholas Bryant

The internet threat to traditional travel agents moved up a notch this week with the entry of Australian internet travel company travel.com.au to this market under coveted domain name travel.co.nz.

Launched in Auckland the end-to-end e-business travel company travel.co.nz claimed "the end is nigh for travel agents."

Travel.com.au was voted Australian Net Guide's best e-commerce site last year and competition for the limited New Zealand e-travel dollar is already tight.

Ihug has Travel Online and Xtra Travel is another established site.

But travel.com.au cited projections showing $US12.8 billion worth of travel would be bought over the internet by 2002. The figures from Jupiter Communications estimate the travel booking industry is worth $US4.2 billion in sales, making it the world's largest e-consumer sector.

A New Zealand operation, travel.co.nz, bought out by Aussie e-travel pioneers travel.com.au last year, was a conventional travel agency until only a year ago.

It was formed in 1976 as the Howick-based family-owned Jetsave Travel, later becoming Advantage Travel (ATS). Industry sources say this is the type of suburban agents that shuts up shop at a staggering rate of four a month.

Those outlets have also suffered from decreased airline to agent commissions, down from 9% to about 4-5%, but the internet is also a major threat.

But Travel.co.nz's managing director, Greg Southcombe, said it was a matter of picking the industry trends and acting before the others.

Early last year his company, ATS, bought Auckland-based executive travel company Gilpin and with his broad-ranging portfolio went looking for a buyer. It found one in one-year-old travel.com.au and by September had sold ATS for an initial payout of $1.5 million, soon to be about $5 million in cash and shares.

Mr Southcombe believed he had a secret weapon - the use of contract brokers - industry consultants with a strong client base. He said it was a unique ATS feature and one travel.com.au had already adopted.

The off-site brokers, of which there are over 100 in this country, keep a majority of the revenue they generate and work well within the internet format.

Each broker has their own site, managed and altered by them, within the main web site

"It has proved popular for our Australian partners as it gives a personal connection to the somewhat impersonal e-commerce environment," Mr Southcombe said.

The new company intends to be New Zealand's biggest, best online travel site, and with travel.com.au setting up similar ventures in Japan and South Africa, as well as retaining ATS' $50 million turnover in the local market, it is well placed to do so.

The Australian company has quickly built annual turnover to about $A102 million, but that is only about 2% of the Australian travel sales market.

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