Travel agents must learn to collaborate and share some basic resources, or many players will be forced out of business as severe challenges hit the sector.
That’s the view of Duma Travel CEO, Themba Mthombeni. Shockwaves caused by online booking services are being compounded by escalating costs eroding profit margins. Now strong demands for radical empowerment transformation by the government are adding to the turbulence and forcing customers to seek suppliers with BEE credentials.
The answer lies in collaboration, not competition, says Mthombeni. He frankly admits that Duma Travel endured major problems when it expanded too rapidly. Government accounted for a large portion of its business, but paid so erratically that Mthombeni couldn’t pay his own suppliers on time. That provided juicy gossip for an industry where rumours and cutthroat competition abound.
But Duma Travel fought back to emerge with tighter controls and more business savvy. The battle scars leave Mthombeni able to spot the looming challenges and recognise that only creative collaboration can help travel companies navigate the treacherous waves.
The toughest issue is transformation, and as a 100% blackowned business that’s 50% held by black women, Duma Travel has the right profile to ignite transformation across the industry. The company has developed a series of solutions to help other travel agents transform and cut their costs, while still winning new business.
The strategy is four-fold. At its heart is a scheme to buy stakes of up to 51% in medium-sized agencies through a new division, Duma Associates. Travel franchising doyen Rod Rutter, the former COO of the XL Travel consortium and previously American Express Travel, has been brought in as Duma’s head of acquisitions, to negotiate deals with agencies looking to gain a BEE profile and the growth opportunities that it offers.
“We are making radical transformation accessible and acceptable to everybody, and providing them with scalability through shared services,” says Mthombeni.
As well as gaining BEE status, these associates will also benefit from cost savings offered by Duma Shared Services. This new division will provide routine but strategic services such as ticket issuing, back office functions, sales and after-hours support, at a far lower cost through economies of scale. That will cut the running costs and leave the staff free to focus on customer service.
Another new division is Duma Tech, which will supply an e-commerce platform for its associates. Smaller players will then be able to offer the online booking services that customers expect, and tie in their back office systems to automatically generate invoices and reports.
“Our Shared Services and Tech divisions will take the costs down and provide a better way of doing business through better technologies and economies of scale,” says Mthombeni.
A fourth exciting step is the acquisition of the sub-Saharan African rights to represent UNIGLOBE, one of the largest travel franchisors in the world. Duma Travel is now recruiting other agents across the country as UNIGLOBE members, giving them access to its global brand, cutting-edge technology, global buying power with hotels and airlines, training to international standards, and the ability to handle international UNIGLOBE customers visiting Africa.
Taken together, these measures can revive the threatened industry and bring new business to its players. “We want to reinvigorate the industry through black shareholding and collaborative measures. This industry has seen too much myopic, competitive behaviour and it’s time to collaborate,” says Mthombeni.
CONTACT
Duma Head Office
Melissa Golombick 087 942 2667
*This was paid for by client