Arrangement of Passenger Transportation, NEC

SIC 4729

Companies in this industry

Industry report:

This category covers establishments primarily engaged in arranging passenger transportation, not elsewhere classified, such as ticket offices, not operated by transportation companies, for railroads, buses, ships, and airlines.

Approximately 135,300 people were employed in travel arrangement and reservation services in 2010. According to the American Society of Travel Agents, 85 percent of cruises, 70 percent of tours and packages, 50 percent of airline tickets, 30 percent of hotels, and 25 percent of car rentals were arranged by travel agents that year.

The number of agencies accredited by the Airlines Reporting Corp. (ARC) increased from 6,911 in 1970 to 33,593 (excluding satellite ticket printers) in 1995. Total agency sales grew remarkably during that period, from $5 billion to $101 billion. Just a decade later, in 2005, there were 21,486 agency outlets listed by the ARC, selling $62.5 billion in airline tickets alone, 31 percent of all agency sales that year, continuing a decline begun in 1993 when 60 percent of agency sales came from air. Totals dropped below 50 percent in 2001 and were down to 33 percent in 2004. In 2008, approximately $80 billion in travel was arranged through ARC member agencies.

Consolidation in the agency business was a major trend beginning in the 1990s. In 1992, the 10 largest agencies reported a cumulative $18.3 billion in sales at their U.S. locations, according to Travel Weekly. In 2005, the top 10 recorded sales of $99 billion, based on combined results in the United States and overseas. Less than 1 percent of ARC agency businesses accounted for more than 57 percent of all sales in early 2006, while nearly 89 percent of ARC agencies sold just over 10 percent of the total.

Another trend, beginning with the explosion of Internet use in the 1990s, was the online agency. In 2008, four of the top 10 largest travel agencies did their business online: Expedia was third overall with $21.3 billion in sales; Travelport (which owned Orbitz) was sixth overall with $10.8 billion in sales; Travelocity was seventh overall with $10.6 billion in sales; and was tenth overall with $7.4 billion in sales. Interestingly, staffing costs, the largest expenditure of conventional travel agencies, was just as large an expense for online agencies, which typically employ high-priced technology hardware and software experts, travel counselors, and call center service workers (most often outsourced). Additionally, as large credit card merchants, online agencies faced significant expenses by paying merchant fees and facing losses from fraud. Marketing was the largest expense faced by online agencies, ranging from national advertising campaigns in traditional media to links, banner ads, and other online marketing tools.

New York-based American Express, long an industry leader, posted sales of $30.2 billion and employed 61,000 people in 2010. Carlson Wagonlit (CWT), a privately held Minneapolis firm, was an industry leader that was newer on the scene. In 2006 the firm expanded by purchasing Navigant International, and sales for CWT in 2010 were $24.3 billion with 19,000 employees. Other industry leaders included BCD Travel of Atlanta, with $7.2 billion in 2010 sales and 10,800 employees; New York-based HRG, a subsidiary of U.K.-based Hogg Robinson with 12,000 employees; and several smaller firms such as Pleasant Holidays LLC and American Tours International, located in California.

The industry is influenced by trends and demographics within the United States and foreign travel markets. In the mid-1990s, U.S. travelers took nearly 1.1 billion personal trips annually. This figure showed a marked decline after the terrorist attacks of September 11, 2001, although the travel industry as a whole had recovered by 2003. Business slowed again during the recession of the late 2000s, but industry experts were seeing signs of a recovery by 2011. In addition to U.S. travelers, the industry continued to benefit from international tourism in America. Expanding international tourism--one of the largest sources of foreign dollars flowing into the U.S. economy--was expected to continue to grow throughout the 2010s.

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News and information about Arrangement of Passenger Transportation, NEC

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