Agents of Change

To survive in a volatile business world, travel agencies are getting big and little

June, 2003

Over the past several years, the travel industry and travel agents in particular have endured what seems like the modern-day equivalent of the seven plagues: Sept. 11, the wars in Afghanistan and Iraq and now SARS. This is in addition to the growth of travel bookings on the Internet and, probably the biggest blow, the elimination of airline commissions early last year. Chicken Little was an optimist.

However, you won’t hear Tats Kobayashi, owner of Kamaaina Golf & Ski Travel, complaining. Actually, even if he did have a complaint about his business, he wouldn’t have time to voice it. He’s just too damn busy.

“I haven’t had a day off since October,” says Kobayashi, who operates his Kaimuki business with only the help of a part-time assistant. “My clients tend to be people who look for value, not necessarily the cheapest fare or accommodations. They know what they like, and they’re loyal. I’ve been fortunate.”The bulk of Kamaaina’s business revolves around four escorted golf and ski tours to the Mainland and Canada, as well as Neighbor Island golf packages. Kobayashi started his business four years ago, after a stint as a corporate travel agent on the Mainland. In its first year in business, Kamaaina had $40,000 in gross sales. Last year, Kobayashi topped $300,000 in sales, a 10 percent increase from the year before.

“With all the golfers in the Islands, I figured that I could make this business work in Hawaii,” says Kobayashi. “What surprised me was how many skiers and snowboarders there are in Hawaii. They’re young, they like to see new things and they have some disposable income.”

The success of very small niche players, such as Kamaaina Golf & Ski Travel doesn’t surprise Danny Casey, president of the Hawaii Chapter of the American Society of Travel Agents. According to Casey, the current business and political climate has led many travel agencies to either become niche players like Kobayashi or expand operations and offer more services. According to the Airline Reporting Corp. there are approximately 25,000 travel agency locations in the United States, down from 33,000 a year ago.

“We’ve seen some shrinkage in the business locally,” says Casey, whose voting membership is down to 83 members from 100 two years ago. “Some have left the business, others have consolidated. I think the actual number of people working in the industry has stayed about the same, but we are seeing the demise of the traditional travel retail location.”

The line of demarcation between big and little agencies may be the Internet and how each is able or unable to utilize it. According to the Travel Industry Association, in 2002, about 64 million people used the Internet for trip planning, a dramatic increase from 1997, when only 12 million Americans were planning and researching trips online. Also, in the past year, more than 39 million people actually booked travel using the Internet, up 25 percent over the year before.

“If you want to compete with the big guys, you have to go to the Web,” says Ed Felipe, executive senior vice president and director of IT/IS at Panda Travel. “Expedia and Travelocity haven’t affected our business too much. But that’s where the industry is headed and we want to be a part of it.”

This month, Panda upgraded its Web site, enabling consumers to purchase inbound and outbound travel packages, as well as interisland packages online. The company anticipates heavy online traffic, but hasn’t made any projections. Instead, they’re taking a wait-and-see attitude. “There’s the old way and there’s the new way,” says Felipe.

Meanwhile, back in Kaimuki, Kobayashi continues to book fares and reservations the old way. “There are a lot of people with money in Hawaii,” says Kobayashi. “They like quality, but they also want to see their dollar go as far as it can. I can help them do that, and I’m someone they know.”

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David K. Choo