Two prominent Long Island travel agencies that specialize in luxury travel have merged, combining their storefront operations under one roof in Plainview, NY. The owners of the agencies said they needed to cut overhead costs to position themselves for post-pandemic success.
The south shore agencies, Power Travel of Plainview, NY, and #1 Travel of neighboring Merrick, NY, have reinvented themselves as #1 Power Travel, LLC. Matilde Broder, former president and owner of Power Travel, and Beverly Markman, former president and owner of #1 Travel, are 50-50 partners in the new venture, where they share the title of co-president.
“My rent was astronomical, and their rent was astronomical, so we joined forces and merged our businesses,” explained Broder, whose agency was selling $16 million annually before the pandemic, catering to a similar clientele as Markman’s $14 million agency.
The combined agency now occupies the adjacent storefronts that Power Travel previously had leased for itself.
‘A way to grow’
Broder and Markman, both longtime agency owners who came to know each other on fam trips and at Virtuoso events, had considered merging a few years ago. But it was the impossibility of paying continued high rents while earning vastly shrunken revenues that caused them to get serious about joining forces.
“When Covid came, we tried very hard to keep our identity, keep our staff and keep our expenses down,” said Markman. But while Broder’s landlord renegotiated relatively reasonable rent terms last year, Markman’s landlord was less generous. “We knew there were long months ahead of us. We decided this is a perfect opportunity to join together and have a way to grow,” Markman said.
So Markman closed #1 Travel’s storefront location and on Oct. 1 made the 12-mile move to Plainview. When the office reopens to the public, Markman’s staff will share a 1,000-square-foot space with Power Travel’s independent contractors, and Broder’s inhouse staff will continue to work out of adjoining office space.
The two agencies will continue to operate separately in many ways, with advisors retaining their separate clientele, and each co-president overseeing her respective staff. “We are together, but we are independent,” Broder said.
Slashing costs, leveraging size
The cost savings for both owners are considerable.
“I was paying $5,000 a month rent, and now I’m paying $2,000,” Markman said. Savings in overhead like electricity, phone systems, and insurance are significant. Plus, the two agencies now share one accounting system. They also save by paying just one Virtuoso membership rather than two.
Another plus: When travel picks up, their combined sales volume will allow them to earn higher commission overrides from suppliers.
The co-presidents see new growth opportunities as a result of joining forces. They’re planning to start an affiliate program for agencies that want to piggyback on the merged agency’s enhanced marketing and buying power. Already, one agency is all-but onboard, Markman said.
They also are looking at creating a training program to attract new entrant advisors. Both women said they anticipate that many young people will be looking to get into travel once a travel recovery is in full swing.
They also hope their new stature and volume will help them attract and retain independent contractors. Broder and Markman said they were devastated when their separate agencies lost veteran top-producing ICs to a large travel seller currently offering lucrative signing bonuses. “We figure that if we are bigger, we’ll be stronger and we won’t let that happen,” Broder said.
A driving force in making the merger happen was the second-in-command executives at the two agencies – Donna Guttman of #1 Travel (Markman’s daughter) and Lisa Enden of Power Travel. The former vice presidents, who were already friendly with one another, are co-vice presidents in the new venture. “They really had the vision for the future,” Markman said.
Another asset in the merger is the two agencies’ similar workplace cultures and staffing, and the fact that staff members already know each other. Markman and Broder said they look forward to the camaraderie and information sharing that will emerge once their advisors return to the workplace. “We’re joining all this knowledge together, and that makes for a very good travel agency,” Markman said.
Vendors have commented favorably on the compatibility of the two agencies. “They said it was perfect – the same type of upscale clientele, the same need for the same type of resorts and vendors,” Markman said.
Is there a lesson in all this for other travel agency owners and travel advisors? “The lesson is don’t give up. There are different ways to re-emerge, and it could be better than before. Keep on going,” Markman said.
Or, as Broder said, “It’s good to change.”