Sometimes I feel like a parent with 60 teenage kids. Like yesterday, when the frantic prank email went out to our entire staff: “Ragen (from Tour Operations) puked in Rick’s office. Does anyone know how to clean up the carpet?”
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Each year the 16 managers at Europe Through the Back Door join me on an overnight retreat, and the remaining 60 employees have the building to themselves. It’s like when parents leave a high-schooler at home alone overnight — you just know something crazy’s got to happen. Judging from the mess we returned to, everyone’s grounded for a while at ETBD.
Our annual management team retreat is a critical part of running our business as each ETBD manager essentially runs a separate business (retail, tours, rail, books, etc.) under our big roof, and this is a time when we look ahead, fine-tune, compare notes, address employee concerns, and recalibrate. I am passionate about running an efficient show so we can be profitable, provide good employment, and be a fine value for our traveling customers. It’s all about design.
We dealt with many issues. For example, work space has been tight. We just rented a big, old house across the street that will be christened “Book Haus” and will haus eight of our guidebook editors. This will open up much-needed space in our main building.
We dealt with my philosophy of pay, perks, paid time off, bonuses, the advantages of being a privately held company, and the freedom to take time off without pay. For the second year in a row, the entire staff enjoyed a big bonus. With the fragility of the travel business environment lately, this seems smarter than higher wages.
The regular concern about more paid vacation was addressed. (I always say how great Europe is in this regard, yet give paid vacation on the stingy American business model.) I stressed how — as I have never had anyone pay me for not working, but always have had the opportunity to save up and then take time off without pay — I would like to give employees more money and assure them they can take off whatever time they like (if it doesn’t disrupt their department).
The big challenge (and new commitment) for us is to invest more in software to equip each department with whatever they need to be more productive (and therefore better paid) with less overall labor expense.
Another challenge is the rising euro and our dropping dollar. While our gross revenue has grown every year in the last decade, our net income has been down two times (in 2003 and this year), coinciding with big drops in the value of our dollar. There’s no telling how long this situation will last.
Each department head made a presentation. Our railpass business is down, but it’s not our fault. In the last decade, the people who produce and wholesale railpasses in Europe (Eurail and Rail Europe) have decided they’d rather sell passes directly to American travelers than pay travel agencies and companies like ours a commission to sell passes. Consequently, most railpass retailers are demoralized (shrinking commissions and so on). I believe we manage to sell more passes than any single business in the USA other than ER and RE — but we can read the writing on the wall.
The big rail news this year is not very big: Slovenia has its own railpass (whoopee!). My own travel style has evolved with the average American traveler. With shorter vacation times, cheaper airfare, and more travel experience resulting in more focused rather than multi-country trips, railpasses are no longer such a good fit. While in the past I generally bought one big, fat, wonderful railpass for my entire trip, these days I cobble together a few cheap inter-European flights, a few point-to-point rail tickets, and a little car rental (which I find is becoming a relatively better value than rail).
European Union regulations are having an impact on the tour business. For instance, there is a new, strictly enforced law (designed to keep bus drivers from being groggy at the wheel) requiring bus drivers to get 45 hours entirely off every seven days. This means each tour needs a two-day stretch without access to our bus. This affects our itineraries. We are also feeling a strong push from our tour members to offer single supplements so our single travelers can be assured a single room.
Our guides and staff are concerned that in order to sell more seats, we’re promoting our tours to more “high maintenance” travelers. I assured my staff that we are promoting our tours in a way that maintains our “no grumps” culture and that, regardless of the dropping dollar, we will not compromise on experience, nor will we fill our buses with complainers.
Our HR department reported that in the USA, 50 percent of all senior managers are expected to retire in the next five years. This will set off a scramble for brains in our economy. On top of this, younger employees around the country do not trust the system or workplace because of the lack of loyalty shown to them by management (driven by greedy demands of stockholders). To keep our great staff, we need to be innovative, maintain our fun work culture, and invest in tools so each employee can produce more and therefore make more.
Our business has never been stronger and our growth is steady. 2007 was our best year ever for tours, with 11,800 travelers filling 483 separate tours (my wife Anne and I were just two of these). In each successive year since 1998, we’ve lead more tours (110, 120, 154, 182, 208, 220, 261, 311, 420, 483) and sold seats to more tour members (2,600, 2,700, 3,600, 3,900, 4,700, 4,900, 6,300, 7,700, 10,200, 11,800).
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Rather than resort to paid advertising, we have a secret marketing weapon: using free travel information as our publicity stunt. In 2007, we hired an in-house publicist, which has been a huge boon for me. We’ll give talks at four travel shows in early 2008 (LA, NYC, San Francisco, and Seattle). The LA Times ran an editorial I wrote on drug policy (which was rerun in 10 other newspapers around the USA). I’m hosting a 30-minute documentary for the ACLU on American drug policy (next month). We were named Seattle’s top small business for philanthropy for 2007. And, regardless of my thoughts on why our country has military bases in 130 different countries around the world, we’re entertaining our troops by making our TV show available to the US Armed Forces Network.
I reviewed my upcoming initiatives (including a dozen new audio tours covering Venice, Florence, and Rome to be produced in December) and the gearing up to shoot and produce the last six episodes of our next 13-episode TV series that debuts next October on public television.
After wrapping up the retreat with a big thanks to my managers, we all drove back to Edmonds to clean up our offices.