Interview with Reliance Franchisor

There must be some highly compelling reasons for many to wait in line to be appointed as Reliance Travel Franchisees. No wonder as Reliance Travel has been in the forefront of the Travel & Tourism business for almost 40 years and winning every travel award imaginable, to command such an esteemed presence. What makes the Reliance Travel Franchise programme so attractive? Franchise Asia spoke to Tan Sin Chong, Managing Director (Travel Division) to know more about the franchise programme – its goals, aspirations as well as challenges.

The recent volcanic ash interrupted the travel industry quite badly. How much was Reliance Travel affected by this, and as a travel operator, what were the efforts and measures taken to counter the difficulties faced by your customers?
First and foremost, any natural calamity is bound to affect the travel industry one way or another. The question is to what degree? This is part and parcel of the risks that the travel industry is accustomed to. As the volcanic eruption occurred in Europe, the rippling effect was felt only slightly as we are very far away. At Reliance Travel we have a standard disaster recovery system in place in light of unpredictable events like this. Fortunately, we were not required to implement the system as the incident was rather minor and abated as quickly.  Ironically, no Reliance Travel groups departed at that period of time to Europe. However we had a small group that was about to return to Malaysia but got stuck in London for an additional three days due to the incidence. The group’s airline covered their accommodation arrangements while as a responsible tour operator, we provided some cash to cover the group’s daily expenses as a matter of goodwill via our London office.

Group travels are among Reliance Travel’s major revenue earners. Others include ticketing and hotel accommodation. How have these changed over the years and what are the new trends being anticipated? And what does the future hold for Reliance Travel due to the changes?
In business nothing remains static forever, more so in the travel business. In respect to the travel industry, group travel is still among our major contributors, accounting to almost 50 percent of the revenue, while the other two major contributors are ticketing and hotel accommodation. As for immediate change taking place in the travel industry, would be the escalating growth of knowledgeable travellers who opt for self-guided travel, where they select flights, accommodation, and itinerary on their own via online. The driving force behind this trend is information; or more accurately the easy accessibility of information through the Internet and other sources. These groups – usually comprising couples of two or three individuals, young urbanites in their 20s to 30s, educated and well-versed in English – are more daring and adventurous to plan their visits to foreign countries on their own. As English language is widely spoken all over the world, even in countries like China, it has opened up a whole new avenue for this group of travellers. We see these groups of Free Individual Travellers (FIT) as a strong contender in travel trends, so much so that we envision that we could lose a good 25 percent of our revenue due to this emerging band of FIT travelers within a few years.

How has this trend affected packages offered by Reliance Travel and how will Reliance counter their impact?
Although we acknowledge the emergence of FIT groups but Reliance Travel is more than equipped to handle the competition. Our competitive edge lies in group travel and we recognise that creativity and innovation is the key in maintaining market leadership. As an experienced tours and travel organiser, our knowledge and skills to cover countries like North Africa, e.g., Algeria, Egypt, Morocco, Jordan, or even Eastern Europe countries like Czech Republic, Hungary, and Slovakia are still in high demand for new customers to travel affordably and without hassle. Our expertise also comes useful when travelling into relatively unknown countries and provinces that have recently opened up. To create novelty we also offer travel packages to new destinations like South Africa, South America, the Scandinavian countries, Greece, etc. or modify the packages for travellers looking to expand their horizons.

We also draw FIT groups to us by designing attractive packages through a company under our travel division called PYO Travel (www.pyotravel.com) which is an online portal solely dedicated to provide groups of young, urban travellers who are accustomed to online convenience to arrange their own travel packages. In addition, we have also created travel packages for older FIT groups comprising two or three travellers in their 40s to late 50s by offering our City Scape packages to selected destinations or major city gateways like Los Angeles, London, Paris, Rome, Hong Kong, Shanghai, Beijing, Sydney and their surrounding areas.

We believe the trend to support this band of older FIT travellers, who are not comfortable in planning their own itineraries and wish for prepackaged arrangements, or packages customised specifically for them is another market that we anticipate has great growth potential. To make it convenient for travellers, our City Scape packages are available at all Reliance branches and franchise outlets where our franchisees have been trained and equipped with our proprietary online reservation system to arrange, plan and customise packages right in front of the customer in real time to capture this fast growing market.

With the many smaller travel agencies mushrooming nowadays offering various packages and services at discounted prices, what are Reliance Travel’s strategies to benchmark with the competition?
At the end of the day, it all boils down to our business model. Reliance Travel is purely a marketing and distribution company in charge of promoting a brand promise. When we talk about a brand, it is basically the ability for a company to deliver a certain value undertaken to satisfy its customers. That’s what we have been constantly and irreversibly doing since our inception. To do this, Reliance Travel is governed by a business model of Trust, Speed and Choice. What do we mean by this?

Simply, Trust means that we have been there for a very long time. As a public listed company we have intrinsic values that spell our reliability to meet customers’ requirements – everytime. Our product reliability stems from our excellent relationships with airlines and travel suppliers. We respond to an unsatisfied customer immediately without fail to make him or her a satisfied customer. In short, we have a system in place. Speed is basically about leveraging on technology for online quick response and speed of delivery. Choice is about the hundreds of packages and variables that we make available for our customers to select from, including group and independent tour bookings, flight reservations, airline ticketing, accommodation bookings and customised tour packages. We believe there is a choice for every customer of ours. As a company started almost 41 years ago in 1969, we have been delivering this promise without fail through family holidays to romantic getaways or honeymoons, from business trips to incentive travel or group tours.

Henceforth, we don’t benchmark ourselves on the prices but on the satisfactory delivery of our services and peace of mind attained by our customers. We may be expensive at certain aspects but we do not compromise on our quality services. These are among the main reasons our customers trust and stay with us.

Compared to many other travel organisers, Reliance Travel spends extensively on Advertising & Promotion (A&P). How has this translated into the company’s total turnover and to its brand building efforts?
A&P is very important for us. We believe, if you have something good to tell the world, you tell it even if you have to spend money to do so – which we have been duly doing with the support of our franchisees to promote our brand. A&P is also important for us to alleviate the misconception that our packages are on the higher side. To counter this we organise the Reliance Travel Fair twice a year in March and September at the Seri Pacific Hotel, Kuala Lumpur. We spend a great deal for the fair which essentially is part of our A&P strategy to announce our upcoming travel packages. To make it convenient for our prospective customers, all of our 22 outlets around the country are open during the three-day event to assist customers who cannot join us at the fair ground.

How this has translated to our turnover? A lot. Here is the evidence. Our financial year starts on 1st April and ends 31st March every year. Now, as of June, our turnover has actually grown almost 80 percent compared to last year’s figures – that’s for the first quarter and in our travel section alone. Signs of our A&P pulling in the results include Reliance Travel winning the Brand Laureate Award four times in a row, with the latest being this year. We also clinched the Reader’s Digest Trusted Brands customers’ choice award for the Best Travel brand held this year. The Reader’s Digest Award is exceptionally noteworthy as the award was judged from unbiased and credible results derived from survey conducted by AC Nielsen on Asian customers. On top of this, Reliance Travel Franchise System (RTFS) was recently bestowed the honour of being the only travel company in the ASEAN region to receive a top franchise ASEAN brand award 2009 from the Indonesia Franchise Association and the prestigious Info Franchise Indonesia magazine – all testimony that our A&P strategies are right on target in placing Reliance Travel as the leading travel operator and franchise in Malaysia.

Can you share with us more on Reliance Franchise Programme? What are the key criteria for a prospective investor, and what kind of support you render to the franchisees?
Basically the franchise programme is very simple. It’s all about having the passion in whatever you do. If you see our most successful franchisees, they consist mostly of individual entrepreneurs, who are owners of the business themselves. What differentiates them from others is that they drive the business themselves – this is among the key criteria we look in our prospective franchisees. When I talk to this group of successful franchisees about their business, I usually notice a drive within them; they exhibit some kind of strong ownership for their business. This opposes those who just invest in a franchise business and hire others to conduct the job.

What do prospective franchisees stand to benefit when they become Reliance Travel franchisees? Simply this. Their reach of the market is expedited owing to Reliance Travel’s brand name presence. Reliance Travel is already a renowned name where customers have come to trust for decades. The only contention would be the selection of location of new outlets as we do not want our franchisee outlets to be situated close to each other. In terms of support, we have the front end section to perform reservations and the back end section to handle all accounting related functions – all supplied by us. In terms of sales support and product training, we provide support for franchisees new to the business to function effectively through standardised sales deliveries – from the way our franchisees greet customers, the ambience created, to the way they answer phone calls – since at the end of the day Reliance Travel’s brand name and reputation are at stake. To maintain quality, existing franchisees are updated through sales training conducted twice a year while extensive training sessions are organised for new franchisees including on spot training by senior Reliance Travel officers for one month at the franchisee’s premises.

What is your expansion plan? Is Reliance Travel planning to expand internationally? If so, what are the challenges faced?
To date we have eight company owned and 14 franchise outlets. Our focus right now is to open more Reliance Travel outlets in secondary cities like Penang, Ipoh, Kota Kinabalu, Kuching, Sibu, Miri, Kuantan and few more cities. As for international expansion, we have been acquiring a few companies through a holding company under the Reliance Travel division for this purpose. At present we have acquired a few travel related companies in countries like Singapore, Thailand, Hong Kong and Australia. Plans are in the pipeline to acquire more companies in China, Taiwan, and Japan within the next two years.

Another option would be expansion through franchising starting with Taiwan but it’s too early a plan to finalise at this moment. An immediate area that we would be making our presence felt is by expanding into Indonesia where we have started negotiating terms. Indonesia offers a massive market potential. As for challenges for expansion, these include differences in culture, legal systems, spoken languages, long-distance control from our headquarters in Kuala Lumpur, etc. But then again, in a largely wired world, we believe we have the capabilities and experience to face up to the challenges ahead.