The secret to a good night’s sleep
And how 140 characters is shaping the marketplace
In the second part of a three-part series on Ensemble Travel, CTP executive editor Bob Mowat continues his conversation with the group’s co-president, Lindsay Pearlman, and gets some insight on what’s going to be shaping the travel marketplace in 2017.
If you ask Lindsay Pearlman (pictured above) what keeps him up at night as he looks ahead in 2017, you’ll probably be greeted by a big smile and a good deal of laughter.
“The question,” says Ensemble’s co-president, should really be: “Are there things that let me sleep when I look at 2017. You know, the biggest thing right now is [Donald] Trump.”
Pearlman is clearly concerned that Trump’s regular tweets are “shaping the marketplace.” He says, “We’re seeing stocks go up 10% or 15% and for a lot of people that travel, especially for an older age group, they’re dependent on how their portfolios do. Even if their portfolios are doing okay – and as of right now they are – there’s a lot of [uncertainty]. You might be doing okay, but if there’s hesitancy based on lack of stability, it’s going to impact on your desire to travel.”
Now, while Ensemble’s members report that these people are still travelling, Pearlman points out that they’re making their decision to travel at the last minute – and that’s happening even on the high-end, luxury side, where the booking windows have traditionally been between 12 to 18 months.
“That’s a very different mindset than what came out of the recession,” he said. “When we were coming out of the recession, people had the money, but optically, they didn’t want to travel. Now that optic issue isn’t there any more, but there are other issues that impact it.”
Pearlman adds, “The technology side keeps me up, but like any technology, we’ll get it done and we have and we’re working our way through that. But that’s something that we can control. It’s the variables that we can’t control that keep me up at night.”
As for how things will play out in Canada in 2017, Pearlman offers the following: “When the US sneezes, Canada catches a cold. I know it’s an old saying, but it’s still very true. We’re seeing a more sluggish economy out of Canada then you’re seeing in the US. That being said, in the US, a low base was a good base, so you know they’re rebounding on something that we didn’t actually suffer the pains of, to a degree, coming out of the recession. I know we’re talking eight or nine years ago, but you’re still seeing that lag effect happen. But again it goes back to, at the end of the day, Canadians travel.”
On the other hand, Pearlman is emphatic that “the issue of the dollar is a big deal! And it’s interesting, because the bigger the swings you see on the dollar, the more it impacts on, let’s say, cruise versus tour, right? A lot of Canadians will like the stability of the Canadian dollar, so they’ll book against Canadian pricing if made available. It’s doing okay.”
But he continued: “My concern on the tours side is capacity. I still think there is an excessive capacity in the marketplace. At the end of the day, the biggest benefit on the short term perspective of that is to the consumer because it turns into a price war. I think the race to the bottom isn’t good for anybody, including the consumer. So we’ll see how that plays out. You know there’s a fine balance between market growth and capacity growth, and when you start having capacity growth on the tour operating side or on the cruise side outstripping market growth, then you’ve got a problem.”
As for what Ensemble has been doing to set its members on the path to success, Pearlman is quick to respond, telling CTP: “There are three main areas. One is we have to drive incremental revenues – which we do, whether that be additional at source commission, overrides or unique product offerings. The second piece is operational efficiencies. At the owner’s level, how do we help them drive out costs, be better business people, etc? And third is technology – leveraging the size of the organization, our ability to develop and roll out technology, just drives simple efficiencies. So, if I can provide technology at no cost to a member, whereas for them to have [to put] that technology in place [on their own] might eat up 5% of their bottom line. If I can turn around to you and say here’s five points right to your bottom line. How much do you have to sell to drop five points to your bottom line. So that’s probably the top three.”
On the question of membership and whether it’s still a numbers game, Pearlman made it clear that it doesn’t work that way anymore, explaining that it’s about the type of member you attract to your group.
In this respect, he pointed out that Ensemble has many members who have been with it for 30 or 40 years, including some who have been with it from the beginning, while he noted that the average tenure is in the area of 15 years.
“We’re very fortunate. We have a very loyal member group and we’re very respectful of that,” he said, before returning to the original question of membership and telling CTP: “You have to grow – if you don’t grow, you die. And that reflects contracts because contracts every year require different targets and very rarely do you see your targets and objectives go down, they only go up. But you can’t just chase after how many more members do you have because it doesn’t really matter because with a lot of contracts their history comes into play and if they leave, their history leaves, so there’s no real difference on just pure volume.”
And Pearlman noted that: “The reality of it is when somebody comes on board with us – we have products and services galore – the question is [based on] what we have to offer, does it help you grow your business. We have a saying here that we use all the time, and it’s ‘We’re not in the travel business, We’re in the business of travel,’ so if we can help somebody run a better business that’s more efficient, that’s more productive and makes more money, that’s what success is for us.”
Pearlman added, though, that: “Sometimes making more money isn’t necessarily [the result of] increasing your volume, it’s now more what are you selling. Are you selling better product, higher commission product. Are you selling [other] products with it. Are you looking at the business differently.”
As for whether Ensemble plays a role in helping its members take advantage of new opportunities, Pearlman is quick to respond:
“All the time! We have a field team – our business development team, which does a great job – and their business is to understand the member’s business. We’ve developed tools that allow them to go in and do an analysis on the business. And not only to do an analysis on the business, but then to benchmark that business against their territory.”
For the agency member, Pearlman explains that means they’ll know how they’re trending and on what products and services and which of these are making them the most money and how that compares to that agency’s peer set in its market.
“At the end of the day – and remember, these are independent business people – based on what they want, they choose what they want. It is our job to show them where they can make the most money. What money is on the table. Whether they choose to exercise that or not is totally up to them. And the reasons make perfect sense depending on what the specific needs of that business owner are,” he says.