Sunday Herald, The: Barrhead Travel continues to fly; Despite the tough market, one

Founded 28 years ago by Bill and Donald Munro, Barrhead Travel is a leading independent UK travel agency. A member of the Association of British Travel Agents, it was voted the Best Large Travel Agency Located in Scotland in 2002 and 2003. The company recently opened a Glasgow superstore and employs 160 people.

TRYING, and failing, to contact a travel agent at 6.30pm was a frustration that inspired Bill Munro to break in to the tourism industry.

At the time, some 28 years ago, the banker with National Commercial Bank was bemused at how little the sector was geared towards the needs of customers. Its "draconian" approach to service, he told himself, had to change.

"Agencies were only open 9 to 5, they closed for lunch, took a half-day on Wednesday and often closed early on Friday," remembers the 59-year-old founder of Barrhead Travel, one of the UK's largest independent travel agencies.

With the help of his brother Donald, the company's first outlet was set up in Barrhead, Renfrewshire. Although his brother stepped back from the day-to-day running of the business, it continued to grow until the late-1980s when the UK travel industry began to pick up pace and packages became a little more adventurous than just trips to Benidorm and Majorca.

Although Barrhead Travel had by then expanded to include four outlets, an overworked Bill Munro decided to consolidate operations back into one outlet in a bid to ensure that quality of service was maintained. At the same point, he says, his sales operation switched to specialisation, with agents focusing on particular areas such as business travel, cruises or airlines.

"We started to develop specialisations because, although it's not rocket science, there's a heck of lot to know in certain areas. And if you don't specialise I don't think you properly serve the public. At that point in time people were also looking beyond Spain to Florida and then the Caribbean. This was really the growth in tourism rather than holidays."

The company's organic growth throughout the 1990s was in line with the growth in what is now the world's largest industry. However, Munro stresses that Barrhead's continued investment in staff training and retention has also been vital to its success. This training currently involves two full-time trainees and various outsourced services.

The importance of training cannot be overestimated, says Munro, who argues that Barrhead Travel is an impartial sales and marketing organisation that has thrived on repeat business and referrals. There may always be a sizable advertising spend, but "in terms of looking after the customers, you have to get the balance right".

Currently employing around 165 people in offices in Barrhead, Glasgow Airport and Clackmannanshire, the company's latest attempt to get this mix right involved a (pounds) 600,000 investment in the UK's largest holiday superstore in Glasgow's city centre. The 16,000sqft "experience" store - open from 8am to 10pm - includes 50 sales desks in a variety of themed zones for airline tickets, short European trips, and adventure holidays. The store also has cafe and internet facilities.

This expansion, which comes in addition to "significant" ongoing investment in IT and technology, is about ensuring that Barrhead Travel makes best use of all possible sales channels. Although many staff handle enquiries over the phone (at its 16,000sqft call centre in Barrhead) or respond to e-mail requests for information, Munro believes there is still no substitute for face-to-face contact, particularly when booking package holidays.

Using its tour operator's licence to great effect, Barrhead Travel is now witnessing its most significant growth in the package arena. With the rapid expansion of the low-cost airline market levelling the playing field as far as flight costs are concerned, the company is able to harness its ability to buy in volume (backed up by a 2002 turnover of (pounds) 30 million) to compete with high street agencies.

"We can now source cheap flights when the market is soft and then link them with hotels - that allows us to beat the tour operators at their own game. We are undercutting other players and even in January and February this year, when the market was down between 18% and 25%, we were seeing growth of over 30%. That was down to price."

Although Munro admits that the company's bulk buying of airline tickets is a bit like visiting the "roulette table", airlines are still happy to see their own financial risk reduced by Barrhead buying 100 seats on a plane and leaving them with only 50 to sell.

Not only can passengers benefit from the company's ability to buy in volume, but they also gain financial protection through its operator's licence. Generally, "no-frills" airlines are unable to provide this. However, Munro admits that in recognition of the market volatility in the early part of this year and events in Iraq, the company bought fewer speculative seats that usual in the first quarter.

But with 99% of the agency's flight bookings coming from journeys to Europe or further afield, it still views the airlines as vital partners in its efforts to pass on the best prices to customers and compete with UK players such as Thomas Cook, Going Places and Lunn Poly.

"It's a very competitive market these days, but what isn't? The margins are tight and part of our growth can be linked to our reputation for value and offering prices below what many would expect," says Munro.

"If you run the business efficiently you will still have some margins left. And there's no doubt that economies of scale help in that. The industry usually treats Scotland as a region and, as the biggest player here, our buying power is considerable."

With Munro targeting a 2003 turnover of (pounds) 45m, it is perhaps easy to see why he is sanguine about talk of a depressed tourism sector - even in a year where conflict in the Middle East raised the spectre of a downturn similar to the one which followed September 11, 2001.

Although some commentators have been gloomy about the state of the travel sector, he points out that if you took activity at Glasgow Airport as a barometer and combined traffic connected to package charters, business and domestic traffic, levels rose by 10% two months after September 11. "People are still travelling," he argues.

With tourism numbers still sound, he says, some of the most significant changes are linked to the demographics of the sector. With more older travellers and single people than ever before, a flexible approach to packaging holidays is vital for travel agencies. The trend towards adventure holidays is also reflected in a special section of its Glasgow superstore.

Munro is optimistic about the future and the company's ability to take advantage of new developments. He is also preparing the ground for succession, with the appointment of his daughter, Sharon, as managing director and the allocation of equity to several directors. Sharon has worked in the business for the past decade.

The company, which has been voted the Best Scottish Travel Agent for three years running, has also looked at expansion opportunities in England and in the emerging eastern European markets. However, Munro believes that the most obvious next step for Barrhead Travel would involve ownership of its own aircraft. This plan would essentially improve its ability to function as a package tour operator and tap into the most lucrative growth opportunities.

Although the internet remains a powerful tool in terms of booking cheap flights and the company has home-based staff answering e-mails until midnight, Munro says that is highly unlikely that technology will radically change the package tour market in the medium term. For the time being at least, the travel agency will still be about bringing punters through the door.

"It's fine for domestic low-cost carriers, but most people just don't have the confidence to book a package holiday online. People tend to buy from brands they feel confidence in and Barrhead Travel is a brand they can trust."