MINNEAPOLIS--Sept. 28, 1999--Citing continuing losses by Internet travel agencies, the head of the country's largest travel agency franchiser questioned the future viability of Internet travel booking sites that are not backed up by "bricks and mortar" locations. Michael Batt, President of Carlson Wagonlit Travel's Associate (franchise) division, told 1,000 Carlson Wagonlit Travel associates that Internet companies are averaging a loss of around $20 per ticket sold.

Batt made the remarks while introducing Carlson Wagonlit's new Website, CarlsonTravel.com (www.carlsontravel.com), as part of its "Click, Walk, Talk" travel strategy at the Carlson Wagonlit Travel Associate Division's annual meeting in New Orleans.

Can Internet Travel Companies Survive?

"'Pay no attention to the man behind the curtain,' was what the 'Wizard' of Oz sought to tell Dorothy and friends when trying to make them believe in fantasy," stated Batt. "Similarly, despite incredible losses experienced on the sale of each ticket and incredibly low commissions provided for each ticket, Internet vendors would still have us believe in the fantasy that they are something that they are not and never will be."

Batt based his comments on a recent review of Internet travel agency company results. He noted that it is difficult to build and maintain a high-tech, high-investment business when the funding comes from airline commission now as low as 4% and hotel groups who are refusing to pay commission or capping commissions at $2 per stay.

Batt said, "There is a huge amount of lookers, but most bookers still prefer the service and price competitiveness of professional, technology-enabled travel agents." Batt stated that the best use of the Internet business model is in combination with a retail presence, which is the strategy being pursued by Carlson Wagonlit.

Numerous Studies Point Out Problems In Online Agency Market

Quoting a study by Boston Consulting, which was reported by The Financial Times, 62% of every dollar spent by U.S. Web shoppers is going to bricks and mortar retailers that have on-line operations. The study revealed that Internet companies are spending an average of $42 to snare each customer, while "bricks and bytes" retailers (those with stores and Web presence) spend only $22 per customer.

Another study, conducted by NPD Online Research, revealed that 56% of on-line travelers reported having completed reservations with a traditional travel agent after visiting a travel-related site. "There's a reason why the bricks-and-mortar travel agency will remain viable," noted Batt. "They are here to stay because consumers invariably seek out the advice of a real-live human, and they seek the reassurance and expertise that only professional travel agents can offer."

Batt cited a third report, released by Forrester Research, which examined 34 travel-related sites and ranked how well each site converts its experienced bookers, its visitors' average spending, and what percentage of their travel they actually book on-line. Forrester noted that the biggest losers in the fight for the on-line travel market are cyber-travel agencies. The report states flatly that "on-line agencies are in peril."

Batt noted that prognosticators who think the travel agency industry is doomed may be missing the boat (or plane). He noted that the travel agency industry has had a compounded average growth rate of 6% and sales of $140 billion in 1999, up from $103 billion in 1995.

Carlson Wagonlit's Click, Walk and Talk Strategy Unveiled

Based on these findings, Carlson Wagonlit Travel is advancing its "Click, Walk, Talk" strategy. The comprehensive business strategy embraces all forms of booking. It allows consumers to research travel over the Internet (booking it or referring the reservation to a local Carlson Wagonlit affiliate who can answer questions and complete the booking); or walk into an agency location for information or bookings (choosing one of 1,300 Carlson Wagonlit agencies in the U.S.); or find a Carlson Wagonlit agent on the phone (locating one through 1-800-CARLSON).

Batt told the assembled agency owners and representatives that "Whether or not the current generation of Internet operators succeeds, we'll be serving our clients needs and best interests with exceptional value and service, through phones, retail stores and the Internet."

Note to Editors: Carlson Leisure Group, a wholly-owned division of Minneapolis-based Carlson Companies, Inc., manages leisure and franchise travel operations worldwide. Carlson Leisure Group companies and brands include: Carlson Wagonlit Travel Associates and Travel Agents International; Neiman Marcus Travel Services; and Carlson Destination Marketing Services. Carlson Leisure Group also owns a 22% share of London-based Thomas Cook. In 1999, for the third consecutive year, the Carlson Wagonlit Travel Associate program was named the top travel business franchise by Entrepreneur magazine and the sixth best franchiser by Franchise Times.

CONTACT:

Carlson Wagonlit Travel, Minneapolis
Steve Loucks/Gretchen Kreske
(612) 212-2267
(612) 212-2683

This material is reproduced here by permission of Carlson Wagonlit Travel