David Anthonisz is Chairman of ALTO, Global Sales & Marketing Director at Embassy English and co-owner of an English language school in Goa, India. He answered our questions about his vision for ALTO and the evolution of the sector.
The PIE: How much is ALTO about agents and schools working together?
DA: It is unique, as a membership association for both. When we separated from the WYSE Travel Confederation [in 2011] we had our first board meeting to agree an amicable withdrawal and to decide exactly what “New ALTO” was going to be and what it was not going to be. We decided we weren’t trying to compete with ICEF and StudyWorld and the many trading platforms. We also decided that we weren’t a quality assurance association.
“As an industry, we should be able to leverage better corporate rates”
So we had to decide where ALTO could provide the most significant benefit to the language travel industry. And we were unanimous in our desire to become more of a a professional association. Every industry has its own association whether you’re a lawyer, a teacher or a doctor you become a member of a professional association and we can have one for study travel. We can all work together and help to develop the industry as a whole.
And together we can help increase the size of the whole study travel industry.
The PIE: And how have you done that?
DA: We haven’t achieved that quite yet. [laughs]
The PIE: Or how would you do that?
DA: One of the key goals of ALTO is to collate more comprehensive industry data. There’s lots of industry data but much of it is anecdotal really. There is very little global data available. We are looking to instigate the first full benchmarking exercise for the industry. And the aim is to get as many schools and agencies as we can, members and non-members, to contribute to this exercise using an independent organisation like PwC or Deloitte to manage it. Everyone contributes anonymously, with detailed analysis as a result.
The PIE: What is breakdown of your members in terms of agents and education?
DA: It’s about 43% schools, 30% agents, 17% association and 10% service providers.
The PIE: You want to enable commercial advantage for your members too, as I understand?
DA: Yes indeed. When we began looking at running our own association events, we were considering sponsorship. And started wondering how much we all spend on foreign exchange in a year? How many bed nights do we use in hotels as an industry around the world? On airlines, the volume of people that we are transporting, not just in our work force, but our students, is huge. We should be able to get some sort of collective buying power (and interesting sponsorship). And as an industry, we should be able to leverage better corporate rates.
“How many bed nights do we use in hotels as an industry around the world?”
We are currently talking to a couple of organisations which will hopefully enable members to buy preferential forward rates of currency, something we used to do when I worked at IAE Global [agency headquartered in Korea], buying forward rates from won.
The PIE: That would be a big membership perk.
DA: Yes, and we’re talking to Mariott at the moment as well, just as an initial investigation to see if they are able to give us a competitive corporate rate for all ALTO members.
The PIE: It’s obviously difficult to manage a global association. Would you say the highlights are the professional development seminars that you run or do you have much more offline activity?
DA: At the moment the professional development days are probably what people see as one of the two biggest benefits.
Verne Harnish (right) with ALTO Association Manager Reka Lenart (centre) and an ALTO member
As well as the tremendous development opportunities these days give us, if you look at them from a financial perspective, they also offer great value. Attending an event with speakers (such as Verne Harnish) could cost US$500 and US$1000 dollars per participant. At €1,400 a year for ALTO membership, you only need to go to two events and you have already made your money back, so to speak.
The PIE: And the other benefit?
DA: One of the other benefits is networking…
The idea has been that we want to create networking opportunities for the owners and leaders of the agencies, schools and associated industries, and in two ways. Our website has been built to enable members to communicate, you can search for other members, find their personal details, and message them all from within the site. We have a mobile app as well, so you can search for any of our members and you can message them – you can get it on iTunes.
And then we have face-to-face networking which could be as simple sitting around a table with your competitors and your clients and being open and honest in discussing the industry.
The PIE: That brings us on to the NYC Weekender as I’ve been referring to it. As a weekend-long event, is the idea that you could have breakfast with someone casually – as well as more structured events?
DA: As well as the terrific speakers we are bringing to the event yes, the idea was exactly that, we wanted a weekend where people weren’t rushing to buy and sell [as other ALTO events are held on fringes of workshops]. We wanted sessions where we can have open exchange about the industry. If we’re honest, in this industry there’s very little secret information. This should be seen as a great opportunity to discuss what are our big challenges and what can we do together to try to resolve them.
The PIE: And what are the big challenges?
DA: I think the biggest issue of course is one that never goes away which is political and economic change. It’s impossible to accurately predict what’s happening in the world today. Very simple economic and political factors can affect the market so dramatically and so instantly that it’s very hard to pre-empt. But we’d like better visibility in terms of how these changes impact our sector.
“I think that in the next few years, dynamic pricing will be the biggest change to impact this industry”
And there are many situations which are helpful to discuss. Something like the King Abdullah Scholarship Programme (KASP). I recently had quite a frank discussion with an ALTO member about KASP in the US and we both realised we had suffered with almost identical problems. It was very reassuring to know issues we had weren’t affecting us alone.
Another potential big change in our industry is how we manage pricing.
The PIE: Why?
DA: Because the language travel industry is currently lagging behind when it comes to pricing, if you compare it with all other forms of international travel. How many hotels, airlines, and other similar companies set a price in May that is still valid until December the following year? 18 months later? Nobody, everybody changes prices daily. And this is based on capacity, currency, demand…it’s based on many issues.
I think that in the next few years, dynamic pricing will be the biggest change to impact this industry.
The PIE: I see increasing investment in facilities – do you think there will be a ‘leading pack’ in this respect?
DA: Yes. That was one of the reasons I sold my school [to a chain] in 2002 Back in the 90s I put in an internet suite, but I lost a classroom. At the time we didn’t have cheap broadband either, so it was costing me a fortune! I lost income, and we went from selling ourselves as being a small friendly school where the teachers knew every student to saying ‘We have 30 computers, free wifi…’ suddenly I was selling our facilities more and more. It is increasingly the case that students have much higher expectations as to what a school should be.
The PIE: They are considering what else they are getting..
DA: Absolutely, I think it is becoming very important and this could certainly make it increasingly difficult to run a single stand-alone school. The cost of marketing would also be factor, over the years it has become so expensive; much more than it ever was.
The PIE: How much does any operator have to spend on sales/marketing do you think?
DA: I don’t think there are any hard and fast rules in terms of percentage and I certainly wouldn’t like to tell you what our percentage is at Embassy except that it is significant. You’ll have to wait for the ALTO benchmarking to find out the answer to that one.
“If you pay an agent 30% base commission there is a good chance you are actually paying 43/44% as a total cost of acquisition”
Surprisingly I’ve seen that some people don’t always build commission and discounts into their sales & marketing budgets even though it is another cost. If you really look and see how may times you visit an agency, meet them at fairs, how many brochures you send them, scholarships you award etc, put all this into package and the result might come out that your key agents are not your key agents after all. If you pay an agent 30% base commission there is a good chance you are actually paying 43/44% as a total cost of acquisition.
The PIE: How do you see the language travel industry evolving?
DA: One of the very interesting comments made by [ALTO speaker] Verne Harnish was that there are an estimated 2 billion people who will enter the middle class in the next decade – and those that are entering the middle classes will have very different aspirations, especially academic aspirations.
“We only have to look to see how many students still come from developed markets to study English”
We only have to look to see how many students still come from developed markets to study English. Despite the huge investment in developing domestic English education, students more often than not still do not have right level of English. Overall I think it is a buoyant industry and almost a future-proof industry [fingers crossed].
The PIE: Although as we said earlier, stringent visa policy has the ability to change an industry overnight.
DA: Yes it does – if you are a stand-alone school in any one country you are absolutely at the mercy of the current government and whoever is in that particular ministry at that particular time. It amazes (and really pleases) me that more schools in Australia didn’t go to wall over the last few, very difficult years. It was largely because most of them reacted really quickly to make dramatic cuts in their overheads and by making changes to their operating conditions. It’s been really quite difficult to operate in certain countries recently.
If you are a stand-alone school in any one country you are absolutely at the mercy of the current government
And this is where you should see the big chains are more safeguarded – they have a balanced business – the actual volume of students might not change, it might just shift location.
This is why at ALTO we want to try to have as much industry-relevant forward data as we can so we are able to make decisions and changes in a pro-active fashion.. Very often the thing to do is not just spend your time lobbying but to change your business model.
