Consortium Affiliation and Travel Agency Performance: Evidence of Strength in Numbers

Abstract

This paper examines the role of travel agency consortia, a form of collective organization, in the relative economic performance of travel agencies. Fifty percent of the nation's agencies seek to leverage their bargaining position by aggregating their resources within a consortium. Consortia use this strength in numbers to obtain advantages for their members that are primarily associated with economies of scale. The virtually even split in consortium affiliation raises two questions as to the benefit of membership: first, whether membership in the consortium increases returns to the member travel agency, and second, does any increase in return outweigh the cost of membership. Using travel agencies within California as the subjects of this study, the paper reveals that consortium membership does indeed increase returns to the travel agency. These returns exceeded costs by a factor of almost 3 to 1.