AAA Set to Launch First Branded Vacation Product
by Marilee CrockerThe American Automobile Association is preparing to roll out its first-ever AAA-branded vacation product. Cruise and tour products developed for AAA and sold under the AAA Vacations label are part of a strategic initiative that puts the organization’s travel agency services front and center with its 52 million members.
AAA is working with both current and new preferred suppliers to develop distinctive vacation products that will be sold exclusively through AAA clubs to AAA members, according to Bill Sutherland, vice president of travel for AAA National Travel. The product line will be introduced in mid- summer.
“We want to be our members’ first choice for travel agency services,” Sutherland said in an exclusive interview with Travel Market Report. “Our goal is to get more of our members using our products and services.”
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AAA’s strategic thinking in developing products and services is always to enhance member relationships and improve member retention, he said. “If our travel service is generating more income, we have the opportunity to reinvest that income back into member services.”
A monster.com job listing for the position of manager of AAA Vacations indicated that “growing travel sales substantially, creating member value and driving travel profitability” were among AAA’s goals for its travel services.
‘Holy mackerel’
Key travel executives from AAA clubs have been working together on a steering committee to establish and execute a cohesive travel strategy, in a level of inter-club cooperation that is relatively new for the 109-year-old federation of clubs, now 50 in number.
“Many people have called us the sleeping giant [saying], ‘If AAA could get its act together, holy mackerel, what would that mean?’” Sutherland said.
In the face of “a ton of competition,” AAA is working to transfer the high level of trust its members have in the organization, a key asset, to its travel agency services, Sutherland said. “If we could get that core trust level translated over to travel, it would be enormous.”
To make that happen, there’s heightened focus at AAA on leveraging the collective power of its clubs in terms of supplier relations, marketing, technology and other aspects of operations.
The fact that club executives are coming together to develop and execute the strategy is a “huge turning point” for AAA, Sutherland said.
Large customer base
Already, AAA has sizable clout. The organization, unique in the travel industry, is among the top five leisure travel retailers in the nation, generating an estimated $3.23 billion in annual sales, more than 90% of it in leisure travel, according to Travel Weekly’s annual agency ranking.
With 52 million members, AAA’s reach in the consumer marketplace is unlike any other in the travel industry.
“It’s a huge base of potential customers,” one that includes prime market segments for travel, commented industry consultant Jack E. Mannix, who served as AAA’s managing director, travel, marketing and supplier relations from 1993 through 1999.
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“Even if you mine it to where 2%, 3%, 4% or 5% will work with you that didn’t work with you before, those are incredible numbers,” Mannix said.
Mannix noted the power of AAA’s brand recognition. “Most other folks don’t have that advantage,” he said, of AAA’s travel agency competitors.
To what extent will AAA’s move affect competing agency groups?
AAA is “one of the major travel producers in the U.S. Anytime they do something well, it’s going to have some impact on other groups and their ability to capture the customer,” said Mannix, who was president and CEO of Ensemble Travel Group until the middle of last year.
Developing the product
AAA is working with its preferred suppliers to figure out exactly how to differentiate its branded vacation product, Sutherland said. “We’re really stepping up those relationships. We’re utilizing certain partners more strategically than in the past.”
The goal is to create products “that really have some difference, so that a member going on a AAA Vacations [trip] gets something that’s not the same routine thing.”
“The differences can range from things like deeper discounts than can be provided in the marketplace, to unique and engaging experiences, things that might not cost a lot of money but that aren’t accessible to people,” Sutherland said. “Our biggest challenge is building something unique and different.”
AAA began offering a limited number of branded cruise products in a pilot program launched in January. About a fourth of the organization’s 3,100 travel agents were trained to sell the product.
Initial results were positive, Sutherland said. “In our test environment, we began to turn the corner in terms of turning sales. We’re hearing back how good the product is. We’ve got to keep that alive.”
AAA travel services: ‘We’re the sexy ones’
The introduction of AAA Vacations is part of a broader AAA objective to get more members using AAA’s products and services, which include roadside assistance and other automotive services, insurance and financial services.
“The more products and services that are utilized by our members, the more likely they’ll see value in their membership and renew,” Sutherland explained.
AAA’s travel agency services are “part of that equation,” he added.
“We’re the sexy ones, the ones people look at more, because travel is a fun, positive bright light for people. That element of attracting our membership’s attention and view and focus is an important part of the bigger picture of our membership organization.”
Mannix said he sees AAA’s re-focusing on its travel business as a significant move – “not only from the money standpoint, but from the standpoint of the relationship with the customer.”
“If I book my travel through them, suddenly I develop a personal relationship and hopefully more frequent relationship with them. So there’s a strategic benefit. It’s big in terms of their travel business, but it’s potentially even bigger in terms of a membership benefit.”
