Rio Grande Travel's Marc Calderwood

New Mexico Business Journal, Dec, 1995

Keeping customers satisfied keeps customers. It's the only way to succeed in the low-margin, highly competitive travel business.

Lee Calderwood launched Rio Grande Travel in Albuquerque 19 years ago and saw it grow to become the city's largest travel agency with eight offices in Albuquerque as well as offices in Santa Fe, Los Alamos, Farmington, Las Cruces, El Paso, Dallas and St. Louis.

Although she remains as chairman of the board, she stepped down as CEO three years ago and turned the day-to-day operation over to her son, Marc Calderwood. The New Mexico Business Journal caught up with Marc recently to discuss with him how a successful travel agency operates.

NMBJ: Is Rio Grande Travel still a family owned business?

Calderwood: We became an employee stock option company nine years ago, so the company is owned by the employees and five corporate stock holders.

NMBJ: Rio Grande Travel has been on New Mexico's Private 100 list for five years. How did you come to be on the list?

Calderwood: It's a list of the largest in dollar volume of the privately held businesses in the state. Last year we ranked 17th. Our goal is to be in the top 10.

NMBJ: What is your annual dollar volume?

Calderwood: We had $54 million in sales last year. It was a record year.

NMBJ: Rio Grande Travel Agency is the largest travel agency in the state, but how do you rank among other agencies in the nation?

Calderwood: We are the 74th largest in the U.S. out of 40,000 agencies, so we are a large player in the industry.

NMBJ: How did you build your business?

Calderwood: Hard work and risk taking. Mom is quite an entrepreneur. Years ago when she first started the business, she caught the wave of corporate business travel before others understood it. She was the first in the state to really work with corporate business travel, and she was also first in the state to have multiple locations.

Another point is that we are set up as a business, not just a travel agency. For a successful business you need a good sales and marketing department, a good operations department and a good accounting department. We have all three.

We also have an electronic quality assurance program that checks fares and seats 24 hours a day. That helps us keep our customers happy.

NMBJ: Explain how your quality assurance program has helped your business.

Calderwood: Airline fares change dramatically - 120,000 times a day. No human can keep up with that. We bought an electronic system to pick up the fare changes and the seats when they become available.

Airlines overbook by 25 percent, and the seats will become available at 3 a.m. when you can't expect people to be there to pick them up, so the electronic system does it for us. Business people all like the aisle seat. They will take a $500 fare and not bat an eye, but they won't take a middle seat. We've had several instances of being able to call our clients back with lower fare and better seats, and that keeps our customers happy.

NMBJ: Are there other ways your computerized system has helped your business?

Calderwood: Our system is set up so we make fewer mistakes. Our agents have 100 clients or more, and they can't be expected to remember details about each one. Our program reminds the agent to reserve a hotel or a car, for example, in case they forgot. The program will also search to see if the client prefers a king size bed or a non-smoking room, for example. Things the agent probably won't remember. We also have a system to aid our corporate clients with travel management.

NMBJ: What do you mean by travel management?

Calderwood: We are in the backwaters, so we had to educate ourselves, and we had to educate clients as to what travel management is all about. But travel for a corporation is the third largest controllable expense, and we determined that we could take a part in helping control that. We do that by providing management with reports. The reports go out to all our corporate accounts, so management can look at their travel in each department. They can determine if they are getting the benefit they need for the amount of money spent.

NMBJ: What does the future look like for the travel business in light of airlines capping commissions to agents on the sale of tickets?

Calderwood: That cut 20 to 25 percent of our revenue, and I expect further caps. Things like that are just a part of being in business. We'll make it up by charging clients and by looking for other market niches.

NMBJ: How long before we will be charged extra for buying an airline ticket at a travel agency?

Calderwood: We are charging all our leisure clientele a five-dollar fee now. In the future, we will have to charge corporate customers as well. We also have to charge for additional services such as delivering airline tickets and for refunds.

NMBJ: How have your customers reacted to this?

Calderwood: We've had five complaints in three months, so I don't think that's excessive. We have over 380 corporate accounts, and only two have said they don't like what we're doing. Most understand the business need.