GURNEY – the biggest risk was to do nothing

Inside story – August 2013

JTG boss tells how helloworld re-brand will make the group’s agents better off

By Ian McMahon

GurneyROB Gurney says “it did not take me very long at all” to decide on the basics of the new JTG retail strategy he unveiled last month.

“There weren’t hundreds of options, just two or three pretty clear alternative pathways,” he says.

There were risks associated with all of them “but the biggest risk was to do nothing”, asserts the former Qantas high-flyer who took over as JTG boss in September last year.

By December he had crystallised his thoughts on the direction in which he wanted to take the company.

“In January I could have undertaken consultation – in inverted commas – with a couple of weeks of roadshows but I did not think that was an effective way of doing things,” he says.

Instead Gurney embarked on an exhaustive process of testing and refining his strategy through months of in-depth discussions with JTG agents around Australia.

They included, of course, the members of the advisory councils of the company’s franchised chains. But Gurney widened discussions to embrace another 150 business owners – large, medium and small – spread across the country.

Ninety per cent of the talking was done in personal one-on-one meetings with Gurney. Famously, this process lasted more than six months, with Gurney copping some criticism for delay as he pain-stakingly worked through all the feedback he received.

But it culminated last month in the announcement of plans for a radical re-branding of JTG’s bricks and mortar outlets and the creation of a new, complementary digital platform.

A single new brand, helloworld, will replace the Jetset, Harvey World, Travelscene and Travelworld signs that have hitherto identified the various outlets operated by JTG member agents.

At the same time JTG will partner with global online travel agency, Orbitz, to create a new web presence for helloworld.

With these plans unveiled, Gurney is now throwing himself into the process of explaining to all of JTG’s member agents the rationale behind what even rivals concede are “bold” moves.

“I’m doing it personally,” he tells travelBulletin. He is meeting with small groups of about 20 agents, bringing them up to speed with a strategy that has been 10 months in the making.

This will be followed by the commercial offer to agents – a process that will again involve one-on-one discussions.
And then, says Gurney, JTG will show its agents how the new concept will “come to life” – what a new store will look like, marketing and promotion and so on.

What sort of reception have JTG agents given his plans? “The response overall has been really positive,” he says.

“We have had good discussions. Sometimes they have been quite robust – our agents are passionate about their businesses; it’s what makes them successful.”

It is not hard to imagine some of the key questions that will have been asked during these discussions.

The adjacency issue

The most obvious one is what Gurney calls “the adjacency issue”. That is how do you implement a single brand approach for outlets in the same shopping precinct?

He says extensive analysis has been done on this, and the issue was thrashed out in his discussions with the 150 business owners that preceded the announcement of the single brand strategy.

He says part of the solution lies in the three-tiered membership options to be offered by helloworld – fully branded, associate and affiliated.

Associate members will retain their own business names along with identi-fication as “a member of helloworld”.

Affiliate members will have “a strong commercial relationship” with helloworld but no branding.
“The benefit of this is that we’re not a one trick pony. We recognise that businesses want options and that’s what we’re giving them,” says Gurney.

He contends that in most instances the adjacency issue is not critical. “What matters is that the businesses are sustainable whether one is called X, another is called Y or they’re both called Z.”

At present, he says, agents’ businesses are achieving a level of turnover that is related to the volume of traffic through a shopping precinct and the marketing JTG puts behind its brands.

He argues that increasing turnover hinges on generating additional traffic and he asserts JTG will be able to achieve this by putting increased resources into promotion of a single brand.

Where previously one promotional dollar has gone to brand X and another promotional dollar has gone to brand Y, two dollars can now be devoted to brand Z and “the results achieved will be greater than the sum of the parts”, says Gurney.

“If you run a $50,000 advertising campaign and you replace it with a $100,000 campaign you reach a certain threshold where the results increase exponentially.”

He agrees, however, that there will be some “critical adjacency issues” where agents are “eyeballing” each other and in these cases there will be “conversations with affected agents” to work out “bespoke solutions”.

“Where there are genuine areas of potential conflict, if I need to get personally involved, I will,” he says.

He rejects totally speculation that commitments may already have been given to some of the 150 agents with whom he consulted prior to the announcement of the new brand (travelBulletin, July).

“We will be absolutely fair and equitable to all. There have been no secret pre-commitments,” he assures, adding: “My consultations (with the 150 agents) were about achieving a better outcome for the business as a whole. The people I spoke with did not approach the talks with a vested interest in the outcome.”

Gurney is cagey when asked about the possibility of some agents being allowed rights to continue to use the franchised brand under which they are currently trading – but he does not explicitly rule it out.

“We don’t have to make decisions on that at the moment,” he tells travelBulletin.

“In our ongoing discussions with our agents we’re not going to force anything on anyone. We want people to embrace it (the new brand). At the end of the day, if they remain undecided, then we will have a conversation with them.”

Establishing the helloworld brand Gurney is ready for the challenge of establishing the new brand, helloworld, from scratch.

“This has been thought through very carefully,” he says.

“You don’t announce something like this without considerable consultation and I am very confident that a consolidated marketing effort under the company’s first chief marketing officer (the newly appointed Kim Portrate) will have the financial resources and creative partnerships to ensure success.”

Portrate, most recently the leader of Tourism Australia’s global consumer marketing team, has a CV that includes key roles with Australian and US agencies including director of insight and innovation at Carat Media Services, senior vice president group planning direct at BBDO Worldwide and senior vice president of planning at D’Arcy Worldwide.

“Thinking is well advanced on creating a whole identity and building a campaign around it. It’s not just about creating awareness. Usage and conversion are crucial,” says Gurney.

Extensive consumer research, quant-itative and qualitative, will shape the campaign to be unveiled towards the end of this year.

The research has explored positive and negative perceptions of bricks and mortar agents versus online agents and has been used to develop “a new value proposition”, says Gurney. Portrate will announce the appointment of an advertising agency in the next month or so.

What Orbitz will bring to the table Gurney is reluctant to elaborate in too much detail on the JTG-Orbitz link ahead of the signing of final contracts, but he confirms that it will cover both content and technology.

However helloworld will not be an “Orbitz in disguise”, he says, and points out that JTG has extensive contracted air and land content through its consolidation, wholesale and OTA operations.

Over time, the content and technical resources of JTG’s existing OTA, Best Flights, will be integrated into the single Orbitz-backed digital platform.

As Gurney made clear in last month’s announcement of the plans for helloworld, he sees the partner-
ship with Orbitz as crucial to JTG being able to deliver products through whatever channels consumers choose to do business.

He is promising robust desktop booking functionality and “industry leading” mobile capabilities, including the ability to offer customers “mobile-optimised booking experiences and mobile-enhanced applications”.

This multi-channel approach to travel retailing is relatively straightforward for Flight Centre which owns both the online and the bricks and mortar channels.

There are different issues, and potential conflicts, for JTG which will own the digital platform while its agents own the bricks and mortar outlets. But Gurney says JTG’s “highly complementary” channels will operate in a harmonised way. “We will be creating the ability for consumers to interact with us in-store, or online or by phone,” he says.

He is promising a business model that will enable agents to share in the online booking revenue stream. “That’s a revenue stream they’re not currently getting,” he says.

The wholesale brands

Gurney is emphatic that helloworld “absolutely” will be a wholesale brand selling alongside “a portfolio of products from our other great supplier partners”.

At the same time, the company will retain its other major wholesale brands, Qantas Holidays and Viva!.

“I think it’s important that we are able to offer ‘agnostic’ wholesale brands to non-branded retailers,” he says.

Other key points Gurney made to travelBulletin include:

• JTG is currently testing a new cor-porate brand. A corporate membership model within the overall helloworld offering has been “widely canvassed and discussed”, says Gurney.

• A re-organisation of JTG’s senior management announced in the wake of the unveiling of the single brand strategy has seen all executives remaining with the company. (See full story)

The move to a shared service model for the JTG chains late last year will facilitate the work of supporting agents under a single brand, says Gurney.

Clearly there will now be some re-organisation of agency-support field staff. Gurney says it will be the responsibility of his leadership team to design this organisation.

• Gurney is emphatic that JTG is a strong supporter of the AFTA Travel Accreditation Scheme (ATAS) and rejects accusations that helloworld’s planned customer protection policy will undermine the scheme.

“We are investing in a brand and we will be making a service promise,” he says.

“But it is highly complementary to ATAS. We are absolutely aligned with the accreditation program and we have a very high regard for the way (AFTA chief executive) Jayson Westbury has negotiated through this very complex issue.”

• For the first time all the 1000 agents comprising the three JTG branded chains will come together for a single owner-managers’ conference in Melbourne in November.

Gurney says this will provide the scale for a conference with more stature and improved content.

He adds, however, that the company will need to guard against the conference becoming impersonal and losing networking opportunities.

He believes a lot can be achieved with breakout sessions and he will be calling for feedback from delegates.

• The scrapping of the four JTG retail brands and Best Flights will not necessitate a write-down in good will attributed to the franchising model, according to Gurney.

He says this is because the good will value is based on the model’s cash generating ability.

The future vision

What is Gurney looking to achieve at the end of all this?

If all goes according to plan over the next 12 months, he expects helloworld will comprise an “extensive, integrated and galvanised” network of about 1000 bricks and mortar agents.

He envisages around 600 of them will be fully branded and the remaining 400 or so will be associates retaining their own brand but identifying themselves as helloworld members.

Through “a consumer lens”, he says, this will create “two very substantial chains” in Australia – helloworld and Flight Centre.

At present, he argues, the consumer perception is of a dominant Flight Centre and a disparate mix of other competitors.

Backing the new helloworld brand will be a consolidated marketing spend that has hitherto been highly fragmented over four brands – five if you include Best Flights, the JTG-owned OTA.

This will give the new brand “a much larger share of voice and drive significant additional business to the network”, says Gurney.

Beyond that, over the next two to three years, Gurney sees the company’s new digital platform delivering “a more integrated multi-channel experience” to consumers so they can buy their travel when they want to, through the channel of their choice.

The partnership with Orbitz will deliver “highly scalable technology that will give us lots of flexibility”, according to Gurney.

He says: “I don’t have a long list of, say, 10 things I want to achieve (over the next three years). I will focus on a few core objectives. And the over-arching way in which I will define success will be our member agents saying they are much better off because we made these moves.”