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| A Passion For Mexico: Matthew Upchurch is seen above at Cuixmala on the Pacific Coast of Mexico. |
“Communicating with the luxury traveler will become increasingly difficult because they are the most sought-after audience. We truly have to talk to them in the language that they understand; we have to come at them with different value propositions that appeal to different mindsets.”
That’s Matthew Upchurch, chairman and CEO of Virtuoso, commenting on one of the biggest issues facing the luxury travel industry. We say he’s well equipped to face this challenge, since he’s been advising his luxury travel agency consortia on this very topic for the past 15 years.
Over that time, he’s been intent upon upgrading the caliber of clients and advisors within the consortia’s network. His team has maximized relationships with suppliers who provide Virtuoso advisors with exclusive complimentary perks for their clients, a definite advantage in the marketplace. Virtuoso has strived to help members make their agency operations more efficient and to give them tools to improve their businesses. A result of that has been the launch of a new Virtuoso website to help engage the customer more. Strong input from its member committees has spurred the development of educational programs that now make it a snap to train new travel advisors. Its annual Virtuoso Travel Week conference in Las Vegas generates 350,000 four-minute one-to-one meetings, helping advisors to make as many contacts over four days as they would make in five years in the course of general business.
Surrounding these efforts has been Virtuoso’s constant pull to enhance the status of its travel advisors, to be certain that they are confident and capable enough to engage with ultra-savvy, high-net-worth clients on a peer-to-peer level.
The numbers point toward success. When Luxury Travel Advisor last profiled the organization in 2005, Virtuoso had 305 member agencies comprising 5,200 agents who generated $3.6 billion in total travel sales. Today’s 336 agencies comprise 8,900 advisors who generate a cool $12.5 billion in total travel sales.
A series of practical strategies brought Virtuoso to this point. Its Hotels & Resorts Program provides free amenities from 983 properties that can range up to $450 in value; possible add-ons are airport transfers, daily breakfast, late checkout or spa credits. Virtuoso clients are handled with kid gloves by an array of 150 expert on-site land operators in 78 destinations who are able to deliver insider access experiences. A Voyager Club cruise program provides on-board Virtuoso advisor hosts to clients to ensure a memorable experience as well as unique land programs that other passengers, quite frankly, probably aren’t getting. The new Virtuoso.com allows consumers to shop for a luxury travel advisor; the site also allows them to conduct travel research so they feel they’re not surrendering control of the process.
That’s the hardware, but there’s a state of mind that has evolved for Virtuoso travel advisors, which can be summed up in one word: “confidence.” Upchurch says it's imperative to keep that characteristic thriving.
“The number-one job of an entrepreneur is protecting his or her confidence. In a world where there’s so much technology, so much stuff, and everything is going at warp speed, you have to have a process to protect your confidence,” Upchurch tells Luxury Travel Advisor. That message was conveyed to him in a program called Strategic Coach, which he’s been attending in Chicago every 90 days for more than 10 years.
“Confidence is ultimately what people feel when they meet you. If you’re an agency owner, your level of competence and passion and excitement is not only about the verbal way that you convey yourself, it’s about the nonverbal. You can just feel it. At the advisor level it’s the same thing,” he says.
Easily stated, but how can a travel advisor protect one’s confidence when demanding clients are clamoring for new experiences in a world impacted by manmade and natural conflicts and disruptive technology that keeps changing the playing field?
“You’ve got to really know what drives you,” says Upchurch. “You’ve got to stop every now and then and look back and ask, ‘What have I accomplished?’ and establish pride in that.”
His advice? Agency owners and managers should systematically work with their organizations to keep this pride thriving; individuals should do the same. “Not doing it puts you at risk of always chasing the horizon,” says Upchurch. “You feel overwhelmed and burned out, and you start to feel like a victim of circumstance. Ask yourself the following questions, ‘What am I doing today? What am I working on right now that makes me confident?’”
The Strategic Coach program gleaned other insights for Upchurch. He’s learned that many industries other than travel are being polarized between commodity economy organizations (think OTAs) and experiential economy organizations (think luxury travel advisors who customize one of a kind itineraries using unique personal relationships to deliver).
The travel industry first saw such division in the mid-nineties, with the introduction of the ability to book travel online. Travel agents were split into two groups. Some only enabled transactions while others provided full-fledged consultations that added true value to the vacation experience.
Sadly, research showed that consumers began to perceive agents as mere order takers. Airlines served a double blow when they slashed ticket commissions in 1995. Vast numbers of travel agencies disappeared from the landscape.
Many who remained eyed a shift to affluent travel, where the margins were higher and the promise of the retiring baby boomer market forecast a dizzying amount of potential clients.
“There was a mad dash toward luxury,” recalls Upchurch. “I remember saying to everybody, ‘You think this is going to be easy. Yes, there’s more revenue there, but you’re also dealing with the best educated, best traveled, most technologically savvy set of consumers in the history of mankind.’”
To handle luxury travel for these baby boomers, travel advisors needed to be well educated and confident. As a result, in 2000, the group, then called API Travel Consultants, changed the organization’s mission statement to one that was very purposely singular: “To utilize the Virtuoso network to improve the compensation and personal fulfillment of the frontline travel advisor.”
It wasn’t a homerun from the get-go. Some owner members told Upchurch he was overstepping his bounds. What business of his was what they paid their agents?
He insisted that wasn’t his concern. His concern was that the profession would not have a level of advisor with the talent to deal with these baby boomers, who would then seek other ways to purchase travel. “If we didn’t help develop the people we had and if we didn’t bring in new talented people, we would face a single point of failure,” he warned at the time.
Today, he recalls the conflict the change in mission statement wrought with a grin. “The major changes that have really pushed Virtuoso forward all started with some level of controversy,” he says.
API morphed into Virtuoso, an umbrella brand that its members could reference along with the strong, respected names they’d established in their own communities.
Another sea change was the realization that a “push” marketing strategy to garner market share against the behemoth OTAs wasn’t viable. A “pull” strategy was the more pragmatic alternative; it included reshaping the public’s perception of a travel consultant as a professional who crafts itineraries on a consultative basis with the consumer.
“We needed to build a new idea about what it was to be a travel agency and what it was to be a travel advisor,” said Upchurch.
Member agencies had to develop a huge amount of trust in the organization to participate in new processes designed to give them a competitive advantage but which seemed counterintuitive. The Voyager Club program entailed having a Virtuoso advisor host all Virtuoso clients on a cruise, breaking the long-held belief that one shouldn’t allow another travel advisor near one’s clients. Member agencies also began sharing their customer lists with Virtuoso to enable customized automated marketing.
That move to share such information has paid off particularly. In 2013, Virtuoso created a “big data warehouse” with more than $21 billion worth of transactional data, which, when tapped, will provide an enormous quantity of consumer insight. Upchurch credits Virtuoso agencies for always being flexible to make huge changes in the way they do things.
“Whenever we’ve been faced with major changes of direction, our success has been the willingness of our members to consider the issues,” says Upchurch. In fact, Virtuoso today works via a “co-creation model” that utilizes a member advisory board and committees comprised of member advisors. “Nothing happens in Virtuoso that doesn’t go through the member advisory board and the various committees. Everything we do is in tandem with our members and is very transparent. I truly believe that the members, the organization and I are where we are today because we truly executed on that partnership model,” says Upchurch.
There are now additional groupings within Virtuoso called “innovation teams,” also comprised of advisor members. Last year, one such team developed a white paper on “How to Build the Million-Dollar Advisor from Scratch,” and is currently developing a curriculum comprised of week-long training with coaching after six months. The program, geared at bringing new advisors up to speed extremely quickly, will be piloted in April and June. “It’s almost like a virtual version of travel schools reborn,” said Upchurch. Two other teams are developing specific topics into curricula; a new group is about to work on the topic of attracting new talent.
“It was very powerful for us to be at our regional meetings and have our members be the ones who presented,” said Upchurch. “That’s what keeps me so enthused.”
The Next Generation
One of the most successful initiatives for Virtuoso has been to communicate that there is a career path that can generate a healthy, competitive income and a fulfilling lifestyle for those just starting out in their business lives and for those switching from other professions. Training and education have been ongoing in this arena for years within the organization and efforts have paid off. Of the 2,000 advisors at Virtuoso Travel Week last year, nearly 20 percent of advisors present were first timers.
“I can feel the pride there, and the new talent, whether young people or career switchers, has injected energy into the organization. I can also see the effect that they’ve had on the veterans. It’s been a win-win,” says Upchurch, who adds that he is equally proud of agency members giving up their own time to help this whole new generation evolve, whether or not the new advisor is working for their agency.
This next generation of advisors will certainly be useful in pulling in the millennial market, even larger than the boomers, who have their own concept of experiential travel and who are more likely to seek out advice from social networks for travel recommendations and of course are prone to booking online, since that’s how they’ve always shopped.
The Evolution of Virtuoso.com
About booking online: After years in the making, a new version of Virtuoso.com launched in January that allows consumers access to the site where they can do their own travel research and find a travel advisor in a Match.com setting by providing details about themselves and the type of trip they’d like to take. They can also rate their advisors as well as the suppliers they’ve used, and read reviews from other consumers.
Notably, they can read and compare the add-on amenities they will get from hotels or suppliers which are available because they are using the Virtuoso network.
The goal is ultimately to let them engage as much as possible in their trip planning because research shows they want to be involved and don’t want to surrender control (see sidebar, Cracking the Consumer Code).
“We asked ourselves if there was a place for the client to take some sense of ownership, some sense of belonging in this co-created brand called Virtuoso," said Upchurch. Clients will be engaged through an automated system that sends an invitation to clients asking them to review the luxury products they’ve used, as well as their travel advisor.
At the press event launching Virtuoso.com, a reporter asked Upchurch how she could possibly tell her editor that she was writing about a travel website where you couldn’t actually book anything yourself. But that was exactly the story, he told her. “Ultimately, what we’re really telling the consumer is if you don’t want to have a conversation with us we can’t really help you. We can only really truly help the people who want to have a conversation.”
“I love the old adage that says answers are a dime a dozen but a good question is rare. That is the value of a great travel advisor. It’s the conversation. It’s the questions we ask. Every time you interact, you learn.”
One of the biggest challenges remains, which is how can Virtuoso leverage the passion that clients have for their Virtuoso advisors and get them to recommend their services? At the group’s Symposium in Berlin this month, the results of a commissioned study will tap into that topic.
“In 2014 our focus areas are consumer loyalty and growth,” said Upchurch. “There is this huge untapped market of consumers who want to use a travel advisor but just don’t know how to do that.” The reason for wanting to tap into these consumers is obvious: affluent travelers are traveling in droves post recession and Virtuoso advisors are slammed with business.
Upchurch is sure there is still more business to be had. “We believe that there’s a huge opportunity to bring in more of the right clients and that there’s an opportunity to be able to segment the kinds of consumers we bring in.”
Possibly with an eye on freeing up some hours in the day to work with these new clients, Virtuoso is also focusing on operational efficiency because it believes that the margins in the agency business are not where they need to be.
The supplier side of the business is also getting a close look, with Virtuoso focusing on product and service innovation. “We’re working with our partners on how their products are presented both to the membership as well as to consumers. How we source and maintain our portfolio is being looked at very carefully,” said Upchurch. “There are certain categories today that have changed. What is a Virtuoso on-site or a ground operator today versus a specialty operator? Instead of looking at products based on product category, we need to look at products and services and experiences based on the way a consumer would look at them.”
Travel advisors also need to be marketed, or merchandized, the way a consumer would use them, and that can be done by promoting the collaborative travel planning process, said Upchurch, who again emphasizes that it’s not just about booking a trip.
“Applauding the booking of the trip is like walking into any high-end retailer and patting the salesperson on the back because they know how to ring up the cash register. It’s like saying, ‘Hey, I really like how you ring up your products.’”
Instead, collaborative selling is about calling the client when there’s a sale on their favorite products. “It’s about helping clients think out of the box. It’s dividing the travel planning process into the discovery phase, the collaborative phase, the design phase, the reserving phase, the actual trip experience, and then sharing those experiences when the client comes back.”
Doing so will help advisors deliver the “Return on Life” concept Upchurch has long encouraged his members to adapt to set themselves apart.
“Imagine the different conversation you’d have if you approached somebody and said, ‘I don’t want to be your travel advisor to book your travel, I want to be your return-on-life advisor to help you have an ongoing, conscious strategy for optimizing your most valuable non-renewable asset, your free leisure time,’” he says. “That approach is going to appeal to a particular mindset of consumers who have already bought into the idea of wealth management. They’d say, ‘That makes sense, because why would I have a conscious strategy for managing financial assets but not have a conscious strategy for helping me manage my leisure time, which once I screw it up I will never get back?’”
He compares Virtuoso’s business model to Apple’s in that neither organization is trying to be the low-cost leader. “We’re both trying to maintain a certain standard with a certain look and feel. The point of the Virtuoso brand is to create a consumer preference for using Virtuoso agencies, Virtuoso advisors, and Virtuoso products.”
Moreover, Virtuoso’s role is to build an “iOS,” an operating system that members plug into. The advisor, in turn, builds apps that work for their business model. “They’re combining who we are and what we do with their passion points and their tools and putting them together in a combination of ways that is exponential,” says Upchurch.
A Bright Future
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| Motivational: Matthew Upchurch of Virtuoso is known for his innate ability to inspire those in the luxury experience business. |
Upchurch is bullish on the luxury travel advisor business for several reasons. Recruiting new travel consultants is easier than ever and people are entering the business with a variety of entrepreneurial models.
Suppliers, meanwhile, have come back around to appreciating the value the luxury travel advisor adds to a travel purchase after years of trying to lower the cost of the sale through technology. They've realized that it’s the travel advisor who conveys the intrinsic value of their travel product, presenting it rather as an experience that’s more personal and more valuable.
And while everyone wants a piece of the luxury traveler business, the simple fact is, there are a lot of affluent people to go around. The baby boomers and the millennials are huge markets and both see travel as second nature. The challenge is that they’re very connected to their trusted networks of friends and family. For that reason, Upchurch says the pursuit to drive the luxury travel consulting process to an even greater individualization level is vital. “Luxury travelers are willing to pay for things as long as they can see and feel the craftsmanship,” he tells Luxury Travel Advisor. “If you’re my advisor, you’re crafting an experience for me. If I feel like it’s rote, that’s where the value starts to go away.”
Virtuoso last fall hired an outside firm to help the organization determine its core purpose. One of the tenets determined by discussions was that the group's goal is “to enrich lives through human connection.”
In the end, that’s what truly motivates him to drive Virtuoso forward. “I actually believe that human beings are inherently social animals. We are wired for human connection. We crave that,” he tells Luxury Travel Advisor.
Virtuoso
Chairman & CEO: Matthew Upchurch
Number of agencies in network: 336
Number of advisors in network: 8,900
Regions of operation: North and South America, the Caribbean, Australia and New Zealand
Annual sales volume: $12.5 billion
Online: Virtuoso.com, www.youtube.com/user/VirtuosoTraveler
Leading the Way
Virtuoso is supported by seven subject-matter experts who comprise its senior management team.
Their mission is to understand and aggregate affluent consumer trends, what’s happening within the Virtuoso advisor network, and to track general travel industry trends.
“Businesses are like any kind of biological organism; you don’t live in a vacuum,” says Upchurch. “You are interdependent to everything that’s happening.”
Upchurch and the senior management team work off four pillars to drive Virtuoso forward.
Pillar #1: It’s all about the advisors’ clients. How can Virtuoso help its members keep the clients they have and make them happier? How can advisors sell more and get a greater share of wallet? How can existing clients deliver great referral business to help advisors acquire the clients they really want?
“We are not trying to compete with just the booking of a trip. We want to determine how to use alliances to bring people to our members who actually want a relationship, who want someone in their lives who’s a professional, who is really going to help them with what we call the life experience.”
Pillar #2: It’s all about the advisors.
How can Virtuoso help its owner members help their advisors continue to grow and to build stronger relationships? “That’s been a big part of our leading the charge in professional development,” says Upchurch. “It also is at the core of the effort we spend in building relationships between our suppliers and our members’ advisors, as well as in helping our members become better developers of talent.”
That follows a fundamental change in business leadership over the last 20 years, he said. “There’s been a movement away from a typical command-and-control entrepreneur, i.e., ‘I’m the one who holds all the knowledge and everybody else just executes.’ Today’s great entrepreneurs see a market opportunity to attract highly talented people and to develop that talent toward a specific goal.”
Pillar #3: Portfolio of products. “It’s not just about having a preferred supplier list,” says Upchurch. “We work with our suppliers exactly the same way as we work with our members. It’s understanding at a deeper level what they are trying to accomplish. What are their value propositions?”
No supplier is admitted into the network without going through the member committee process. “It’s very, very powerful,” says Upchurch. “It’s not me and Albert Herrera [Virtuoso’s senior vice president of Global Product Partnerships] sitting around and going thumbs up or thumbs down. Literally every single product category is vetted by elected agency members.”
Pillar #4: Agency operations and management. How can Virtuoso provide travel advisors with all the tools to run their businesses? This includes the new Virtuoso.com, education, data-driven intelligence and developing new talent in the network.
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| Virtuoso’s Senior Leadership Team: Standing (left to right): David Kolner: SVP, Consumer; Mike McCown: SVP, Finance & Accounting; Albert Herrera: SVP, Global Product Partnerships; David Hansen: CFO and SVP, Virtuoso Events. Seated (left to right): Becky Powell: SVP, Global Member Partnerships; Dan O’Brien: SVP, Systems & Services; and Terrie Hansen: SVP, Marketing. |
Cracking the Consumer Code
If people love and value their Virtuoso advisors so much, why don’t other consumers use a travel advisor? Virtuoso went to 80 advisor members stretching across a broad spectrum of regions and age groups and asked their clients that very question. What developed from the answers is this single paragraph: “Travelers feel that doing their own planning is empowering and that giving it up will diminish their experience. Their prevalent Internet use causes them to believe they have all the answers they need. They believe an advisor adds to the cost of their trip, and do not understand the value that an advisor adds, or that an advisor is readily available.” Virtuoso calls this paragraph the “DNA of Our Success,” which now serves as the basis for all of its programs and initiatives that directly touch consumers.
“If we solve this from a communications perspective and as a value proposition, we know that we’re going to succeed,” said Upchurch.