Magazine article American Banker

Washington State Thrift Finds a Niche in the Travel Business

Magazine article American Banker

Washington State Thrift Finds a Niche in the Travel Business

Article excerpt

Washington State Thrift Finds A Niche in the Travel Business

NEW YORK -- As summer approaches and faraway places beckon, consumers are going to financial institutions not only to finance their vacations but also to make hotel reservations and book airline tickets.

One thrift says it has found a comfortable niche in the $200 billion travel industry by cross-selling other financial products to its travel customers, earning fee income from major airlines for booking reservations, and simply by collecting the rent that its travel subsidiary pays for leasing lobby space.

Mutual Travel Inc., a partly owned subsidiary of the $3.2 billion-deposit Washington Mutual Savings Bank, Seattle, has booths in eight of the thrift's 52 branches in Washington State. Launched last June, Mutual Travel now handles about 2,500 transactions per month, 70% of them for clients who are not customers of the savings bank. The subsidiary books airline, cruise, and car-rental reservations to domestic and international destinations via United Airlines' computer reservation system.

Mutual Travel estimates that 30% of its customers now come from the 250,000 depositors of Washington Mutual. "There's no question that the number of people using the service is continuing to expand and that transactions are exceeding original projections," says Craig Tall, the executive vice president of WM Financial Inc., the holding company for all of Washington Mutual's nonbanking subsidiaries. Though he acknowledges that "800 transactions per month [from bank customers alone] is not a huge number as a percentage of our entire customer base," he adds that the measurements are somewhat distorted and should be compared to the fact that "probably only 50,000 of our customers are real active transactionally."

Robert Dunlop, the president of Mutual Travel, says Commissions earned is a better measure of success. Figuring in the 10% commission that travel agents typically collect, Mutual Travel will reap $1.1 million to $1.2 million in commissions in 1986, up from $220,000 last year.

'Travel Agents Hate What We're Doing'

To the travel industry, this lost income is threatening, says Mr. Dunlop. "Travel agents by and large hate what we're doing. They've tried to resist the entire process of deregulation. But banks, with their access to huge customer bases and their locations, are natural outlets for travel."

Washington Mutual's administrative resources, its marketing department, and its communications equipment all oil the machinery of Mutual Travel, Mr. Dunlop adds.

The subsidiary's profits are boosted by the 15% to 25% that it skims off the top of the price of group flights that it books on major airlines. Much of that business -- like reservations for trips to Disneyland -- comes from senior citizens, who, Mr. …

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