Travel industry shifts helped shape strategy

The chairman and CEO of Uniglobe Travel has a modest office in downtown Vancouver.

But, really, the world is his workroom.

"I've been to most places you can think of," says Gary Charlwood.

So has his company.

Bayne Stanley, Business Edge
Casual dress is the order of the day for Uniglobe chairman and CEO Gary Charlwood, who greets the business day in a suit coat and shorts.

Since Uniglobe was founded in 1979 and its first franchisee set up shop in Cranbrook, B.C., the company has expanded to 700 outlets across Canada and in such faraway places as China and the Middle East to serve small to mid-sized corporate accounts.

Charlwood is reportedly very detail-oriented and a meticulous planner. But listening to him, he sounds like an accidental tourist turned entrepreneur, whose by-chance experiences began in his youth.

"If the Russians had marched another 45 minutes, my whole life would have been different," he says In other words, following the Second World War, his birthplace became part of the former West Germany, rather than the old East Germany.

During his travels, he has lived through many upheavals in the global travel industry. Despite such far-reaching factors as 9/11, international incidents and the industry's introduction to the Internet - which would result in the collapse of his ill-fated joint venture dot.com company - the Uniglobe name has remained constant for almost three decades.

However, his own identity changed relatively early in his treks. As a result, a German boy became an English bloke and a Canadian executive.

1. How long did you live in Germany?

"I was born in 1941 and I stayed there until 1948 - until the age of seven. I was born of German parents in Germany. I was born Uwe Heinrich Gustav Schremer. My father was killed in the war, my mother remarried and we moved to England in 1948. I became U. - for Uwe - Gary Charlwood."

2. Do you speak German now?

"I'm fully fluent in speaking and writing. Little German kids weren't very popular in England in 1948, so it was a good training ground for me. From 1951 on, every summer, I spent three months in Germany with my grandparents and one month every Christmas. I had really good grades at school, so as soon as exams were over, I took off. As time went by, I studied German as one of my topics and then later I lived in German-speaking countries (while working) in the travel business. German, English, French and Spanish are the languages I speak."

3. What career interested you when you were growing up?

Gary Charlwood

"I aspired to somehow be involved in the travel and entertainment industries. My first full-time job was with a company called Royal Mail Line, which eventually became P&O. I was a management trainee with them and I found it incredibly boring and restrictive, so I took a summer job as an entertainer and sports coach at a Club Med-kind of facility. I rose up the ranks there and then via those ranks, I became exposed to the international package-tour industry."

4. How did you end up moving to Canada?

"In Germany, I lived in a town of 10,000-15,000 people. In England, it was London - a megalopolis. I was very much at home in the German culture and I was very much at home in the English culture, the captain of my cricket team and soccer team, and all those kinds of things. But deep down, I felt that I didn't belong in either. I wanted to go to the New World. For me, choices were Australia, South Africa, New Zealand, Canada and the U.S. My first choice was Australia and I actually made my applications to go there. Just a quirk of circumstance, I happened to be at that time in the travel business, and I was working with a large travel agency in Vienna, Austria, and one of my clients was the Canadian embassy. The (embassy's) commercial attaché to that agency was a gentleman by the name of Bob Merner, a graduate of the University of Alberta. We became really good friends. They were my account in the travel agency business, and he said, 'What the heck are you going to Australia for?' I said, 'The sun and the beaches and whatever.' He said, 'No, no, no. You just can't go to Australia. You've got to go to Canada.' I said, 'Bob, it's too late. My papers are already ready. I'm leaving in two months.' But he convinced me to come to Canada. I had my second child on the way at that time - that's Martin, my now 40-year-old son. I told him my applications for Australia took two years to process and I didn't have the time. He said, 'Well, you didn't know the ambassador.' Somehow, the papers (allowing entry to Canada) arrived in a couple of months. I arrived in Canada in November of 1966, just four months before Martin was born in Burnaby General Hospital."

5. What gave you the idea for Uniglobe?

"I had very limited funds when I came to Canada. I had one son, Christopher, who at that time was about two years of age and I had another one on the way. I quickly needed to find employment and Canada was very good to me - right from the beginning. I figured I might not see my family for three or four months, but I actually saw them within two weeks of arriving. I had a job and I brought them all through. My first significant career was with the oldest airline in North America, Western Airlines, which is now Delta. I rose through the ranks of that organization, became supervisor, then got promoted and sent down to California to their head office, where I became passenger service manager. I went from managing a staff of 30 to managing a staff of 300. I was very young to do all this. Then I was headhunted by CP Air - which was taken over by Air Canada, as you know - because of a special job I was doing for Western. CP hired me as director of consumer affairs. I came back to Canada and then I just looked at my options. I was 30 years of age with a great title and I was about to be made a (vice-president.) But I thought to myself, 'This isn't really working. I'm not accomplishing any of the goals that I set out for myself.' I decided I would give CP six months notice, which I did, and I embarked upon getting my real estate licence and went into the real estate business. It required no (investment in) inventory - I had no money to speak of. But you could, essentially, be rewarded for whatever you did.

I did exceptionally well my first year in the business. I had no choice.

I had exactly three months of money to support myself. In my first 15 months, I sold 118 houses. At that time, that was a huge quantity.

Today, our (Century 21) salespeople have assistants and all kinds of help. But back then, we had one secretary in the company and 30 salespeople. I made four or five times my annual salary in that first year.

"I bought 50 per cent of the oldest real estate company in Vancouver (Hunt Realty) and developed it. In 1974, I started Century 21 Canada with my former partner Peter Thomas. I bought Peter out later, in 1989. I lived in different cities across Canada, including Vancouver, Edmonton, Regina and Saskatoon. Then I moved to Toronto with my team of people that I had hired. Many of them are still with me. Some five or six years later, we were made an offer to be bought out as a parent company. I did some soul-searching and ultimately turned down the offer. We had a good company. But it did make me think. What would I have done had I sold? All of my training before that had been in the travel industry. I just wondered how all the principles that I'd learned by developing Century 21 from scratch as its CEO would apply to the travel industry. So we hired a company called Wirthlin and Associates. Dick Wirthlin later became the chief pollster for (then-U.S.) president (Ronald) Reagan. He was a friend of a friend of ours and, at that time, conducted a $100,000 research project into how a franchise might work in the travel agency business. He came back with a recommended path and we followed that path. I started the company between 1979 and 1980. Then we had two (companies.) The principles were very similar. A real estate company is a middleperson between a buyer and seller and a travel agency is a middleperson between a seller of travel, cruises, hotels, tour packages, airline seats and buyers."

6. What was your vision for the company?

"We would specialize in corporate travel because, at that time, we were the only organization that brought startups into the business. Startups are people that have no background in the travel industry. They have a business background. When you start a business from scratch, you have to have rapid cashflow and the leisure side of travel takes a long time to build. People don't go on vacation every month or two. But traditionally, if you sign a corporate account, most people travel on a regular basis. Our philosophy with our owners was, 'We don't want you learning all the details of how to write tickets. You can hire staff to do that.' " 7. How would you compare the western Canadian and eastern Canadian markets?

"In Western Canada, we have 47 outlets. In Eastern Canada, we have 56 outlets - 103 outlets altogether, specializing mainly in corporate travel. Western Canada has more rural locations. Eastern Canada has more urban locations. But their business mix is very similar. Western Canada may have a bit more of an accent on leisure simply because of the more rural character outside of the big cities. The eastern Canadian business machine is always quite vibrant, but it's not as vibrant currently as Western Canada. Alberta and B.C. are super vibrant. Western Canada is going through a real boom time."

8. Was Uniglobe affected by 9/11?

"Big time. The whole industry was affected. It wasn't just 9/11, it was earlier than that. The travel industry was revolutionized by several things. Traditionally, about 70 per cent of the revenues of a travel agency were made up by airline commissions. In 1995, with a lot of pressure on profits, there was a major move by the airline industry to cut costs - and cut costs they did. A $10,000 (sales) figure, which might be a first-class ticket to Asia at that time, would pay 10 per cent, so $1,000 in commission. But in 1995, the airline industry announced that they were capping that to a $50 commission. Just picture the difference. A thousand dollars. Now, you get $50 for the same transaction. It turned the industry on its ear. Very shortly thereafter, the second blow came and they eliminated commissions altogether. The change was catastrophic. Then the Internet arrived and started taking business away and growing dramatically. It's kind of levelled itself out now. Then came 9/11. So a combination of all three factors changed the travel industry dramatically. It dropped the number of travel agents in the U.S. from 36,000 in 1995 to about 15,000 now. Those that stayed in, including us, had to dramatically change how we do business. How did we do that? We did that by instituting fees ... Now, it's a very healthy industry. But it certainly went through some real struggles.

In Uniglobe, we had 1,000 outlets. That's now at 700, and that's a complete microcosm of what's happened to the industry."

9. What happened with Uniglobe.com?

"That company is defunct. It's gone. It was a bad experience. We were too early into the game. It was an idea whose time had not yet come. Our goal was to have Uniglobe.com be the Internet provider for our travel agency system. The travel industry was very spooked at that time by the whole Internet. Now, they're educated and understand these days and see it as a tool. At that time, they saw it as a threat. We had incentives for (agencies.) We had guarantees that if there was a client that went directly to (Uniglobe.com) that came from one of our franchisees, we would direct that business back or pay them for that business.

"We couldn't have been more considerate and far-sighted, but the industry was spooked ... Our franchisees didn't support it. Obviously, we had no choice, because we didn't want to compete with them head-on, which we simply wouldn't do. We closed down the company, essentially.

At the end of the day, it was my decision and I said: 'Fish or cut bait. We've spent a lot more money in this concept than we considered. We haven't got the resources of Expedia or Travelocity. I'm not going to let it bleed the rest of our businesses.' " 10. What other lessons did you learn from that experience?

"People were chasing (unrealistic dreams.) One day I was in San Francisco with my sons, dealing with an underwriting house and I was by far the senior-aged person around the table because our executives at Uniglobe.com were all young guys. So the analyst, who was a very respected young - younger than 30 - all-American analyst, said, 'Do you have any questions?' I said, 'Yeah, what do you think Uniglobe.com is worth?' He rubbed his chin and looked at me and said: 'Somewhere just south to somewhere just north of $1 billion.' I said to myself: 'This company is a year and a half old. It's fledgling. How is it remotely possible that this company could be worth that?' It was then that I realized this thing was just going to totally implode.We decided we were just going to be very square, meet our obligations and exit gracefully - which we did."

11. Why did you decide to expand to Asia?

"The vision for Uniglobe always was that we were going to be a worldwide company. We picked the name Uniglobe - one world. We now have 700 locations, largely regionalized (with master franchisors in each region). Our philosophy currently is not so much on regions as it is in putting ourselves into major cities in the world where our clients travel. We want our clients to know that if they are anywhere, there's a Uniglobe office reasonably close at hand. That's our business goal."

12. What's your outlook for the Chinese market?

"I was on Table Mountain (in South Africa) in February and I told myself: 'This is an outstanding, beautiful spot.' I looked at the people standing at the top of the mountain. There may have been 15 or 16. My older son Christopher was with me and I said, 'Christopher, within five years, it's going to be difficult to move around on top of this mountain because we're going to have something like 500-600 Chinese people here at any given time.' That is such a massive market, as is the India market. These markets both have a burgeoning middle class. I was in China a couple of years ago. When you go places like the Forbidden Palace, busloads of people are coming from different parts of China because they've never travelled before.

Now, they're doing quite well financially, so here they are on vacation - inside their own country to start with. But the next (trend) is going to be (travel to) different locations around the world. There's millions of them - and the same thing is happening to India."

13. What's your view on operating in the Middle East?

"The Middle East has been a problem forever. But people still live there. People still travel there. If you want to be an international organization, you have to be there, too. I only hope one day it all settles down. That's not likely to happen in my lifetime."

14. What does it take to run a successful travel agency today?

"It takes an entrepreneur. As a result of all of these changes in the travel industry, we've not bought many startups in the past several years. The travel-agency industry from 1995 to the mid-2005 timeframe had a reputation of poor value. (People thought) you must be really hurting. It wasn't the environment entrepreneurs would be interested in opening up an agency, but it's beginning to change again. What does it take? It takes exactly what we taught our startups at the beginning. It takes an entrepreneur - somebody who doesn't sit in an office and wait for business to come to them, but goes out and gets the business. That's a key focus in our training - going out and acquiring those accounts and providing stellar service to those accounts (and) growing with those accounts. It requires a pretty comprehensive understanding of what's out there from a technological perspective, because clients are becoming more and more sophisticated. Travel experience is helpful, but the key thing is a complete understanding of what technological tools are out there that puts you in the position to provide first-rate service to your clientele. You also need to be a very capable people manager, because there is a shortage of qualified personnel. Consequently, when you get a good (employee), you want to make sure that they're comfortable and want to stay. The other thing is, it's not possible to be a small player. An independent has a tougher time of it than one that's affiliated with an organization that has some influence and some access to technology. They need to be part of a network. If I had a single travel agency, I need human-resource guidance (and) I need sales and marketing guidance. Whatever I need, these are all people I have to hire. Those are all available from a network at a fraction of the cost."

15. How would you describe your management style?

"Autocratic. No, I'm joking. Our philosophy is, you hire good people and you let them get on with the job. You inspect what you expect, which is what I do. I believe most people who work in our organization - hence the longevity of them - believe it's their company. We've nurtured that belief."

16. Where have you travelled?

"I wouldn't even know where to start, I've travelled to so many places. On my agenda still to do is Russia and India.

I'll be in India next year for our region's conference. And in my Century 21 world, we have Century 21 Asia Pacific. That involves every country in Asia, with the exception of China, India and Japan. We have something like 300 offices in those parts of the world. My exposure to that is going to be more and more, particularly in some of the developing (countries), like Vietnam, which doesn't yet have a real estate industry."

17. Did you ever think of developing vacation properties?

"Many times. That may well be something that we one day do as a family ... My concentration over the years has not been propagated by a strategy on my part (but) just simply how life works - buying out partners. We are now the 100-per-cent owner of all our companies. But over the years, we've had partners ... The accent in past years has been on buying out partners.

The accent going forward is probably going to be quite different, so (real estate development) may well be something we do."

18. It's been reported that you're a details guy and you keep several lists. What kind of lists do you keep?

"The most important list to me is my exercise list. I plot the number of miles I run, the number of miles I swim, the number of times I swim, the number of times I lift weights, etc., and I have an annual target. I usually meet that target. I usually run something like 1,400 miles a year and swim 300, and I'm on track to do that again this year. I hope I can do it until I'm 80. All that, but maybe a little bit slower. Every day, I make up a list of what my priorities are and I try to do the most important things first. I usually get most of them done."

19. What indispensable items do you take with you when you travel?

"My running shoes, running gear, swim trunks, and iPod and BlackBerry. I used to always take my laptop and still take it 90 per cent of the time. But I'm mostly finding now that if I go to a place where laptop access is (not available), I won't bother taking it. I'll do most of my stuff by BlackBerry."

20. If you weren't running Uniglobe or Century 21 Canada and Asia Pacific anymore, what would you do?

"I would become slightly more distant, and the details would be supervised by a very capable president of Century 21. My sons are very capable executives. So my role is kind of changing gradually. My expectation in the future is that I would like to be a silent investor and adviser to fledgling young entrepreneurs - like an angel in business."

Gary Charlwood

* Title: Chairman and CEO, Uniglobe Travel.

* Born/raised/age: Germany/Germany and England/65.

* Education: Attended Southampton University in England.

* Family: Two sons, one daughter.

* Career: Charlwood began working as a summer tour guide while still in university and then worked as a full-time tour guide and travel executive in several European countries, including Belgium, Spain, Switzerland and Austria. He came to Canada in 1965 with $2,000 to his name and quickly landed executive posts with Western Airlines, now Delta, and CP Air, the predecessor of Canadian Airlines. He became a real estate agent in the early 1970s and, with a partner, launched Century 21 Real Estate Canada. He returned to his travel-industry roots in 1979 and founded Uniglobe while continuing to operate Century 21 Canada. He later acquired Centum Financial, which ranks among Canada's top mortgage brokerages.

* Moonlighting and Awards: Charlwood is a member and past chairman of the International Franchise Association (IFA) Hall of Fame and is the first Canadian to be named IFA entrepreneur of the year. He is a member of the World Travel & Tourism Council, an association made up of the CEOs of the world's top 100 airline, transportation, hotel and travel companies, and has served as chairman of the American Society of Travel Agents corporate advisory council as well as an ASTA board and executive committee member. In addition to holding executive posts, he has contributed his time and money while Uniglobe raised more than $6 million in corporate donations for the Easter Seals Campaign through such events as a 24-hour relay and annual regatta. Charlwood and Uniglobe franchises have also partnered with Plan International to raise funds to build five schools for the Girls Education Initiative in Guinea, West Africa. He is also an international corporate partner with Plan for "Rebuilding Hope," assisting those in need from the 2004 tsunami.

Uniglobe Travel

* Brass: Gary Charlwood, chairman and CEO; Martin Charlwood, president and chief operating officer; Tracy Bartram, executive vice-president and chief financial officer; John Henry, senior vice-president of global development; Melanie Moore, senior vice-president of marketing and industry relations; Amanda Close, vice-president of global operations and regional services; Andrew Henry, vice-president of U.S. operations and industry relations.

* Profile: With revenue of $2.2 billion, Uniglobe bills itself as the world's largest single-brand travel franchise organization. Uniglobe agencies specialize in providing travel services to small- to-medium sized companies and leisure travellers. Uniglobe is part of the Charlwood Pacific Group, which also owns Century 21 Real Estate Canada Ltd., Century 21 Asia Pacific and Centum Financial Group Inc.

* Stats: Uniglobe has more than 700 locations in over 30 countries, including Canada, across North and South America, Europe, Asia, Africa and the Middle East. Century 21 Canada has more than 400 locations and 6,700 salespeople. Centum, a mortgage brokerage franchisor, has 175 locations and 4,800 agents across Canada. Together, the three firms have more than 1,700 franchised locations worldwide.

* Website: www.uniglobetravel.com

* HQ: Suite 900,1199 West Pender St., Vancouver, V6E 2R1.

* Phone/Fax: (604) 718-2600 / (604) 718-2678.

(Monte Stewart can be reached at monte@businessedge.ca)