Agents Watching Apple Closely as It Expands

Travel agents are wary about the implications for them of Apple Leisure Group’s latest acquisition, CheapCaribbean.com, but remain unsure what, if any, impact it will have on their business.

Apple announced this week that it had acquired the online agency, which sells resort accommodation and vacation packages to the Caribbean and Mexico. Apple said CheapCaribbean.com will operate as a separate company within Apple Leisure Group.

Apple’s acquisition of CheapCaribbean.com follows its purchase earlier this year of wholesalers Travel Impressions and American Express Vacations International. In late 2012, Bain Capitol bought an undisclosed stake in Apple Leisure Group, which also includes AMResorts and Unlimited Vacation Club.

Fears about going direct
A chief concern for agents following Apple’s latest acquistion is what it may signal about the firm’s intentions for Travel Impressions.

It is troublesome that “first Apple buys a tour operator [Travel Impressions] that doesn’t sell to the public and then it turns around and buys CheapCaribbean which is all over the Internet – going direct and discounting,” said Jennifer Doncsecz, president of VIP Vacations in Whitehall, Penn.

“You’d hope that things stay status quo, but they always change.”

But Sandy Anderson, president of Riverdale Travel Leaders in Coon Rapids, Minn., had a more optimistic view based on her positive experience with Apple.

“I’d rather have a company that understands the value of travel agents purchase an OTA – and Apple does,” said Anderson.

“Apple does sell direct, but in my dealings with them they’ve always supported my agency. Like all tour operators Apple has had to work on gaining market share in different ways, but I know it values its relationship with the agent community.

Positive implications
“I think Apple may be thinking about going to more of a relationship between agents and CheapCaribbean,” Anderson said, citing Apple’s email to agents about its acquisition. The email indicated that Travel Impressions will continue to price-match CheapCaribbean.com and agents will now receive commissions of up to 14% on those matches.

The fact that Apple mentioned price-matching at 14% commission – “before the ink is dry” on the acquisition – is encouraging, she said.

“I’m not going to lose a customer to CheapCaribbean.com, and that’s the important part.”

Anderson said she found another aspect of the developments at Apple encouraging – Bain Capital’s investment in the company. “It’s exciting to see venture capitalists go into the travel world; that they are looking at these companies as assets.

“It tells us we’re worth something out there.”

Preferred vendor agreements
Doncsecz said she is also concerned about how Apple’s expansion might affect the consortia’s partnerships with Travel Impressions.

Travel Impressions is a preferred vendor for the major agency consortia – including Ensemble, Signature, TRAVELSAVERS and Virtuoso – but Apple Vacations doesn’t have ties to any agency groups, Doncsecz said.

“So agents affiliated with consortiums should be curious about what’s going to happen,” she said.

High touch vs. mass market
Cathie Fryer, president of Cerrito, Calif.-based CTA Travel, said she’ll be watching operations at Apple’s growing portfolio of companies closely, just as agents monitor Carnival Corp.’s moves with its multiple cruise brands.

“We’re keeping an eye on what it does and all the entities it owns,” she said.

Fryer is also keeping an eye on possible changes in Travel Impressions’ product. Travel Impressions is a “high-touch, more premium” operator than Apple Vacations, she noted.

“We don’t want to see that high end [Travel Impressions] go lower,” she said. “As long as the service is maintained we’re good with that.”

Fryer said she sells Apple Vacations “as a standard service.” Those sales are quick-turnaround transactions for agents and at a good price point – combining air, hotel and transfers – for the consumer, she said.