Fears that the latest cloud of ash from Iceland could disrupt Advantage’s conference, which starts in Lucerne on Friday, subsided this week when the wind changed direction and flight restrictions were relaxed.

At Advantage’s central headquarters on Tuesday there was a feeling of relief at the end of the ash threat – and also that the clouds that hung over the industry last year may be lifting.

Advantage appears to have had a good recession. Revenue from leisure sales was up 9% last year compared with 2008. Cruise sales were up 28% by volume, and package sales up 6%. Overall turnover increased from £2.5 to £3 billion in the last 15 months.

This was against an overall market that was 10% down in volume and revenue, says chief executive John McEwan.

The one negative figure was business travel, where revenue was down by 9%, but he says it is showing signs of revival this year.

A nation of shopkeepers
The growth has been achieved partly as a result of the mushrooming of the number of shops within Advantage’s membership.

The arrival of Elite within Advantage’s umbrella last year added 80 locations, another 31 came when Althams Travel joined this year, four came with Regal Travel and 10 more with Wallace Arnold.

There are now 139 more shops bearing the Advantage name across the country than there were 15 months ago, and individual members are also expanding.

McEwan cites Directline Holidays, whose turnover has grown to £38 million, Barrhead Travel, which is expanding in Scotland and beyond, and Advantage’s largest member by number of shops, Flight Centre, as examples.

The growth has gone alongside a change in the nature of how Advantage functions as a consortium, moving from providing traditional member benefits like commercial terms with suppliers and marketing support, to bespoke consultancy services, says McEwan.

“We are increasingly becoming a consultancy as well as providing the customer services we traditionally have,” he says.

However, the traditional services are also expanding. Advantage’s white label website is about to be relaunched to include bookability for the first time, and other improved services are due to be announced at the conference.

The expansion is one of the reasons McEwan thinks talk of more consolidation or alliances is unlikely for the foreseeable future.

He was instrumental in setting up the Triton super-consortium with Global and Worldchoice five years ago, which foundered within three years amid differences between the three parties involved.

Triton was right for the time, be believes, and succeeded as a counter-attack against Tui’s decision to cut commission to 7%.

But its battles have been won, and the change in the nature of consortia since then makes close link-ups unlikely, he says – pointing out that Advantage is now the only consortium owned by its members.

There would have to be “compelling reasons” for Advantage to change its view that it is best served by being independent, he adds.

Industry grows up
Another factor that works against more consolidation is a “more mature” attitude in the industry where consortia are no longer at each other’s throats commercially or trying to poach members, he says. “The industry is more grown up and profitable than 10 years ago when everybody was trying to undercut each other.”

Advantage’s growth strategy is focused on targeting independent agents who are not part of any consortia, rather than going after rivals’ members, he insists.

Any threat to all of them from the Big Two has subsided as Tui and Thomas Cook realise they do need independent agents for some of their distribution.

Cook chief executive Manny Fontenla-Novoa recently said he wanted in-house distribution to rise to 85% within three years. But McEwan is confident that both Cook and Tui will need independents for about 20% of their distribution.

“It will never get to 100% because the cost of distributing that last 20% or 30% will always be too high, when there are cheaper ways of doing it through independents,” he adds.

A bigger threat could be what’s coming when the new government gets to grips with the UK’s deficit. McEwan is braced for an increase in National Insurance, top-rate tax and VAT.

He also fears there will be an increase in APD after the coalition promised to use it to help pay for an increase in the tax threshold – and he warns this would be seen as “punitive” by the industry.

But with ash gone for now, and many of last year’s economic clouds blown away, the horizon still looks brighter than it has for some time.