Lowestfare.com goes into wholesale business; sells through travel agencies

An online agency has begun selling its vacation packages through more traditional travel agencies as well as on its own Web site.
Lowestfare.com‘s decision to go into the wholesale business was timely, as it needed to offer travel agencies something to replace the low-cost TWA tickets it had been selling. The TWA tickets, part of a multi-year deal between TWA and Lowestfare owner (and former TWA chairman) Carl Icahn, were a lucrative product for the agencies that sold them. The TWA tickets were 25% less than published prices, enabling agencies to add in profit margins of 10 to 15% - far higher than the paltry commissions they typically earn on airline tickets - and still sell the tickets to their customers at a discount.
But American’s purchase of TWA ended that stream of revenue for both Lowestfare and the 3,000 travel agencies with whom it had established relationships thanks to the TWA tickets. To replace that, it began selling its vacation packages - already for sale on its Web site - through travel agencies on April 15.
Lowestfare, which also owns Maupintour, a more upscale tour operator offering international escorted, FIT and adventure travel packages, already had another vacation product. It had begun building the Lowestfare vacation package product a year ago when it opened its Fort Lauderdale office. These packages include Mexico, Las Vegas, Reno, Hawaii, the Caribbean, California and Europe and tend to be more mid market than Maupintour. Opening these packages up to the travel agency channel was a fairly logical way to leverage an existing relationship.
Lowestfare is paying agencies 12% commission and up on the vacation package sales and has established an agency site, http://agents.lowestfare.com. It is currently information only, but ultimately Lowestfare plans to add a booking engine. In the meantime, Lowestfare has designed the site to be a dynamic electronic brochure for agencies to use for their own information and for their customers. The company already has two call centers operating to take consumer calls on its vacation packages (even on its consumer site, very basic packages are bookable but more complex packages must be completed over the phone - although the Web site shortens the sales cycle and is increasing the conversion rate) and has established a separate 800 number for travel agencies.
“The travel agents are psyched,” said David Lovely, senior director of marketing and communications for Lowestfare, after he had spent about two hours in one of Lowestfare’s call centers talking to agents. Agents were pleased that Lowestfare had moved so quickly to replace the TWA tickets and wanted attractively priced, high value products.
The Lowestfare vacations are mainstream, $199 Las Vegas-style packages.
Some of the travel agency consortia with which Lowestfare has established partnerships include GIANTS, Vacation.com, WorldKey and Travel Savers.
“We think it’s great that Lowestfare is doing this,” said Dick Knodt, president and COO of Vacation.com. “We think it gives new choice to our members as to how they sell, certainly it’s a new avenue and forward thinking.”
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