Selectour SA - Company Profile, Information, Business Description, History, Background Information on Selectour SA

6, rue Laferrière
75311 Paris Cedex 09

Company Perspectives:

To better understand the needs of consumers, it is necessary to put oneself in their place!

Selectour has also based its approach on this fundamental idea. This has enabled the network to anticipate in order to adapt to the needs of its clientele.

History of Selectour SA

Selectour SA is France's leading network of independent travel agencies. The cooperative company groups more than 400 travel agents and 520 agency offices throughout France, producing a total ticketing sales volume of more than EUR 1.28 billion ($1.2 billion) in 2001. Selectour enables independent travel agents to compete against large-scale tourist groups by offering combined purchasing power and extensive support services. Through Selectour, member agencies gain access to a nationally developed marketing and communications program, which includes the publication of market-specific Selectour advertising brochures (such as the "ten lowest-priced vacations", and special "Honeymoon", "European Capitals," and "Seniors" packages). Selectour customers receive company-backed trip cancellation insurance as well as other travel insurance benefits. Selectour also takes charge selecting and negotiating pricing with tour and travel operators, hotels, airlines and car rental companies, enabling the Selectour network to offer high-quality packages at low prices. Since 1999, Selectour has operated in partnership with hotel and vacation resort giant Accor, a partnership that expanded at the end of 2002 with the inclusion of Globalia, the second-largest travel agent network in Spain. Selectour is led by founder and CEO Philippe Demonchy.

Grouping for Strength in the 1970s

Philippe Demonchy operated his own travel agency in Paris in the late 1960s. The French travel and tourism industry was then undergoing a transition. The arrival of jet airplanes, and especially the shift towards larger planes such as the 747, enabled holiday-makers to travel farther in less time, sparking interest in long-distance vacations. The development of the first electronic communications networks, pioneered by SITA in Europe, had set the stage for new ticketing capabilities. At the same time, the French industry saw the rise of a number of powerful tour and travel groups, such as Club Med, Havas, Nouvelles Frontieres and the like.

Demonchy recognized the vulnerability of the independent travel agent confronted by the changing market. In 1970, he launched a new cooperative society, Selectour, with the aim of grouping independent travel agents under a common banner. The group provided its members with greater purchasing power and other advantages, such as the development of tour packages and a shared brand name backed by full-scale marketing efforts. The Selectour network offered advantages to consumers as well, particularly with the institution of the group's cancellation insurance, which enabled customers to receive full refunds, with Selectour absorbing cancellation charges. As the network grew, Selectour also began holding an annual congress, where Demonchy and Selectour management met with Selectour members to discuss the current travel market and prepare for the future. The first annual congress was held in 1978.

Demonchy's idea caught on quickly. Starting with just ten member agencies, Selectour grew rapidly through the 1970s and into the 1980s. By the middle of that decade, Selectour counted more than 200 members and more than 300 agency locations. During that time, Demonchy and Selectour continued to refine the cooperative association's offering, developing a "test" in the form of a game that helped clarify customers' vacation and travel needs, thereby enabling travel agents to prepare packages better suited to customers' needs. Another initiative taken by Selectour was the preparation of video cassettes, which agencies could lend to their customers. Selectour also developed its own holiday insurance packages and took charge of meeting customer complaints.

Business travel was another important area of the cooperative's operation. In support of this market, Selectour developed a "business kiosque" for its member agencies, enabling agencies to take over the entire travel needs of small, mid-sized, and large-scale corporations. The cooperative's ability to buy in bulk gave member agents access to competitive pricing, an advantage heightened by the creation of the "Club Selectour Affaires," which grouped together the 75 member agencies with the largest business sector activity. The strength of this sub-network enabled Selectour members to compete against the pricing advantages of larger travel groups. At the same time, the independent, entrepreneurial nature of Selectour members proved an attractive feature for many small and mid-sized businesses.

By 1981, the Selectour network accounted for more than FFr2 billion (EUR 300 million) in sales per year. Ticket sales accounted for the nearly 80 percent of Selectour's sales, with just 22 percent represented by tour package purchases. The group saw steady gains through the decade, topping FFr 3.2 billion (EUR 470 million) in 1985 and FFr 4 billion (EUR 600 million) by 1987. By the end of the decade, the Selectour network boasted total revenues of more than FFr 4.2 billion and 320 agencies, making it the third-largest travel group in France.

Yet at the end of the 1980s, the French travel market was changing again, as a number of key players in the industry began a series of mergers. Such was the case with Club Med and Nouvelles Frontieres, as well as with Havas and Wagon Lits. Meanwhile, government-owned Air France, the dominant airline in the French market, had teamed up with Frantour, the tourism arm of French railway agency SNCF, and with tourism group FRAM in early 1989.

By the middle of that year, Selectour moved to join the trend, announcing its own partnership with Air France. The agreement called for the two groups to cooperate on a number of sales initiatives, while Selectour agreed to sign on to the new Amadeus communications network set up by Air France, Lufthansa, SAS, and Iberia. An important feature of the agreement with Air France was the creation of a new company, Selectour Investissement. Held at 76 percent by Selectour, the new company was set up in order to help solve a growing problem for the cooperative: a number of its members were approaching retirement age, many without any successors in place. Selectour Investissement's role was to acquire the agencies of retiring members or to help finance their transition to new member owners. Selectour Investissement was to play an important role in maintaining the coherence of the Selectour grouping over the long term.

Facing New Market Conditions in the 1990s

With the shakeup of the international tourism market in the early 1990s, hit hard by a lingering recession and by plunging travel rates during the Persian Gulf War crisis, competition tightened, making survival for an independent travel agent still more difficult. In France, Selectour's network, which topped 325 agents and nearly 400 agencies by the middle of the 1990s, faced growing competition from a number of other networks, including Via Voyages, Protravel, and Manor, as well as from the three largest tourism groups operating in the country, namely Havas, Wagon Lit, and American Express.

Selectour managed to keep ahead of the competition. One move that helped the cooperative preserve its competitive edge was its participation in the Woodside Travel Trust, later to become the Radius group, which recreated on a global scale what Selectour had constructed in France. Woodside represented the grouping of some 175 travel agency networks, operating in a total of 53 countries with nearly 3,500 offices and total revenues of some $17 billion. Selectour's membership in the Woodside network not only gave it access to its bulk purchasing advantages but also gave it an edge in winning orders from multinational businesses seeking travel arrangements in France.

With sales of nearly FFr 5 billion (EUR 750 million), Selectour faced new challenges in the middle of the 1990s. For one, more and more of the company's tour package suppliers were opening their own agencies in a move to become integrated organizations. In response, Selectour began developing new travel products, including its own Selectour-branded tour packages, drafted in partnership with third-party tourism groups. In 1995, the cooperative also restructured its commercial offering, separating its operations into two major areas--Selectour Express, for its ticket sales, and Selectour Expert, which took over the company's value-added operations, including business travel, high-end travel, and other services requiring agent assistance.

Selectour also launched a new series of brochures grouping its offerings according to theme, such as "ten lowest prices" or "Immediate Departure," which were joined in 1996 by a new brochure of packages targeting the domestic destinations and a brochure directed specifically at the seniors market. At the same time, the company was also responding to a new market threat, that of online sales. In 1996, Selectour began offering ticket sales through the French online network Minitel. The group also launched its own Web site that year, which provided information on the group's offerings and directed potential customers to the nearest Selectour agent.

Strategic Alliances in the New Century

Selectour moved to counter another growing threat in the late 1990s, as France's large retail groups began rolling out their own travel services. In 1997, the company reached an agreement with the Continent retail group to place Selectour agencies in Continent supermarkets. On another front, business travel had grown to become an important segment of Selectour's operations, representing some two-thirds of its sales--by then, the cooperative's total revenues had topped FFr 6.3 billion (EUR 960 million). Yet the travel market in general, and the business travel market in particular, was undergoing a rapid consolidation. The European travel industry was transforming from largely separate domestic markets into an increasingly cross-continental market.

Faced with competition from a number of larger players--including such recent pairings as Havas and Amex, Jet Tours and Club Med, and Carlson and Wagonlit--Selectour announced its intention to pursue its own "technical alliance," a strategy meant to preserve the cooperative's independent status while giving it the size to compete against the new travel heavyweights. The move was all the more needed because Air France had recently exited the Selectour Investissement partnership.

Selectour found its partner at the end of 1999, announcing its partnership agreement with French hotel giant Accor and its Carlson Wagonlit subsidiary. The alliance, which preserved both networks' independence, nonetheless created a common network worth more than EUR 2 billion. (Selectour's own sales had grown to EUR 1.1 billion by the end of 1999). As part of the agreement, Accor also acquired a 50 percent stake in Selectour Investissement.

The partnership with Accor immediately proved successful on both sides--Accor itself registered a 43 percent sales growth over the first year of the partnership, while Selectour's own revenues grew 12 percent, topping EUR 1.4 billion in 2000. By this time, Selectour had recognized a new trend in the French tourism market. Whereas previously a typical French vacation often included several generations of the same family, the French public was now more likely to seek vacations with just their immediate family. Concurrently, the adoption of a law lowering the standard workweek to just 35 hours had begun to encourage short-stay vacations sprinkled throughout the year. Selectour responded by introducing a new "leisure boutique" concept, both in existing stores and in new dedicated agencies, designed to promote and sell short-stay and spur-of-the-moment sales. A feature of the leisure boutique were self-service computer terminals that enabled a customer to locate and purchase their travel arrangements in a matter of minutes.

The cooperative also reacted to another trend, that of the growing importance of Internet-based sales in the travel industry. In 2000, the group added e-commerce capabilities to its Web site, providing a selection of between 200 and 300 tour and travel offers. Internet sales remained nonetheless a small part of the group's sales, as Selectour continued to emphasize the personal services of its network agents.

The success of the Selectour-Accor partnership did not go unnoticed. At the end of 2002, the partners took on a new partner, Globalia, the second-largest travel agents network in Spain, with some 763 branches operating throughout that country and in Portugal. Globalia also owned its own airline, Air Europa, and its own tour operations, Travelplan. With the addition of Globalia, the partnership took on a new name, Alliance de Sud, boasting nearly 2,500 partner agencies and total sales volume of more than EUR 4.75 billion. While taking a place as part of a European travel agency heavyweight, Selectour had successfully held on to its founder's commitment to independence.

Principal Subsidiaries: Selectour Investissement (50%).

Principal Competitors: I Grandi Viaggi SpA; AAA Auto Club South; Leclerc SA; TUI AG; Havas Voyages American Express SAS; American Express Co.; Compagnie Financiere Michelin; Mycal Corp.; Atlantic Express Coachways; Taisei Corp.; Carlson Wagonlit Travel Inc.; Carlson Companies Inc.; Central Japan Railway Co.; Coop Schweiz Genossenschaftsverband; Allkauf SB-Warenhaus GmbH und Co. KG; MyTravel Group PLC; Thomas Cook AG; ACCOR; TUI Deutschland GmbH; Maritz Travel Co.; Kuhne und Nagel AG und Co.; Quelle AG und Co.; Virgin Group Ltd.; Raiffeisen-Landesbank Tirol AG; Grupo Eroski.


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