In 1990, the year Joe McClure bought Montrose Travel, the company posted $4.5 million in revenues doing all the typical things travel agencies do: booking vacation flights and reserving hotels.

Then came the onslaught of online reservation services, and with it predictions that the travel agency business would become extinct.

Except it didn’t happen with Montrose. In fact, McClure estimates that the company’s revenues this year will be $107 million, up from $102 million in 2004.

Montrose confronted the competition head-on: kicking up its Internet presence and building corporate business by managing trips for small- to mid-size companies. “We have just been very aggressive,” said McClure. “We started seriously taking a look at business models and new sources of revenues.”

While the overall U.S. travel agency industry continues to shrink around 21,000 locations from over 33,000 in the late 1990s a number of agencies like Montrose and L.A.-based Travel Store Inc. have managed to thrive.

Travel companies left standing after the shakeout stand poised to gain from the recent rebound of business travel. They’ve put themselves in that position in different ways. Successful strategies have included buying smaller agencies, cutting losing leisure segments, upping Web capabilities, and attracting corporate clients by expanding professional services.

“The mom and pops are gone. It has introduced a much larger degree of professionalism in this business,” said Wido Schaefer, chief executive of Travel Store, whose 2004 revenues reached $185 million from $120 million in 2002. “We simply had to reinvent ourselves.”

Schaefer stressed that the term travel agency is a misnomer these days. Successful companies now are full-service travel managers. Travel Store and Montrose Travel, for example, rely heavily on corporate accounts, making up 50 percent to 70 percent of the companies’ yearly revenues.

Travel Store has targeted companies in the $200,000 to $10 million range, while Montrose caters to companies in the $100,000 to $5 million range. Those companies aren’t on the radar of the huge travel service firms, such as American Express Co.’s business travel division, Carlson Wagonlit Travel Inc. and WorldTravel BTI.

Pursuing Web ventures


Today’s business goes well beyond reserving an L.A.-to-New York flight for a company executive. Travel Store often places its own agents inside firms to handle all their corporate travel and, like Montrose, has developed technology to help reduce travel costs.

To capitalize on travel by state government workers, Travel Store acquired Patterson Travel, one of the biggest agencies in Sacramento. Schaefer said he wouldn’t rule out future acquisitions if they boost market share.

Montrose is not growing through takeovers, but by developing new businesses on its own. One example: an operation to handle the reward programs for credit unions. When members redeem their rewards, they interact with a Web site set up by Montrose Travel. The company has built individual Web sites for every credit union it services, a business now generating $10 million annually.

McClure also launched MTravel.com to create personal Web sites for home-based travel agents, of which he has signed up 115. “We will continue to invest heavily in technology to reduce costs in manual labor,” he said.

At leisure-oriented agencies, business has changed as well. These firms can’t afford to advertise themselves as selling vacations from Madagascar to Canada anymore because travelers scan the Web for general travel needs.

Marc Mancini, chairman of the travel department at West Los Angeles College, said these agencies have developed specialties to attract customers with narrow requests. Among them: cruises, tour packages and customized trips designed for mountaineers, divers and others.

For travel agents, specialization comes with a bonus. The commission on tours and cruises is often 18 percent, compared with 10 percent on hotel bookings or nothing on airline flights.

Eric Maryanov, president of All-Travel, said his agency is especially adept at handling packaged trips to Hawaii, Mexico and the Caribbean.

All-Travel revenues rose to $32 million in 2004 from $22 million in 2002.