With 41% of U.S. travelers who haven't used travel agents saying they're open to the idea, the agent industry sees major growth potential in market share.
How online travel agents (OTAs) and travel supplier websites decimated the storefront travel agent industry is well known, but two decades later, 2015 could mark a turning point signaling a slight shift in consumer behavior.
Liberty Travel, for example, which defined the brick-and-mortar travel agency industry until the advent of OTAs in the mid 1990s, opened its 7,000-square-foot Philadelphia Travel Store in December. This month, Liberty is scheduled to launch an even larger “Apple-inspired hyperstore” in downtown Los Angeles.
The company operates two similar flagship mega-stores in New York and Boston, along with another 165+ smaller neighborhood locations around the country.
From 1997 to 2013, the number of retail agencies that have employees decreased by 59%, from 22,938 to 9,387. The number of full-time travel agents during the same time span dropped from a high of 124,030 down to 64,250. Non-employer firms (one-person agencies) increased by 7% between 1997 and 2012.
Not all of the much-publicized decrease in brick-and-mortar agencies can be attributed to the rise of online booking behavior, however. Both 9/11 and the economic recession from 2008-10 exacerbated the shift with an unprecedented increase in mergers and consolidation.
Meanwhile, from 2003 to 2014, the number of independent agents working primarily from their homes rose 434%, and as of 2013, they now eclipse the number of U.S. retail location agents. However, even though 40,000 independent agents have entered the marketplace in the 21st century, their combined sales are relatively small compared to storefront and corporate agencies.
“We estimate that less than 10% of sales are coming from independent agents, mostly home-based, measured in dollars,” says Melissa Teates, CAE, director of research at the American Society of Travel Agents (ASTA). “Except, the term ‘home-based’ is becoming something of an anachronism. Location means little in the mobile world and telecommuting is very much a norm across multiple industries, but especially in the agency world.”
Teates adds that there’s a lot of hybrid business models, too, with many retail agencies having both storefront and telecommuting employees.
Today, ASTA member agencies sell over 72% of all travel sold in the U.S. through agent distribution channels, and that rises to 80% when member OTAs are included. Corporate travel represents a larger piece of those sales, measured by dollars, estimated at 60% of member sales, not including OTAs.
Helping drive new business to many of those agents, ASTA has aggressively ramped up its education and research platforms in 2014 to empower agents to sell and earn more. Average agent income in 2013 was $37,200, including both part- and full-time agents, up from $22,850 in 1997.
We spoke with Emma Jupp, president of Liberty Travel; Randy Alleyne, president of travel wholesaler GOGO Vacations; and Zane Kerby, president/CEO of ASTA. All three suggest that travel agents have a lot of opportunity to build market share moving into 2015, because consumers today are pressed for time more than ever before, and personalized service is emerging as one of the most prominent trends in travel.
“Consumers are increasingly using travel advisors and I think the data bears that out,” says Kerby. “Average sales are on the rise, and agencies are thriving with 84% of our members in the first three quarters of 2014 reporting that their revenues were better than the year before. I think the reason behind that is there is so much information available now to people on the internet that you need a professional guide to make sense of it all.”
Using the analogy that access to financial information doesn’t make you a financial professional, Kerby says many consumers want insider information about a destination from a person who knows the destination well. He adds that the average ASTA travel agent has visited 57 countries in his or her lifetime, and they add three to four new countries every year.
The biggest problem for ASTA, however, and the agency model in general, is that people believe there’s a big markup in price when booking travel with an agent.
“This is the great conundrum that we face, because you think you have a direct purchasing model online, but you maybe book Delta two to three times a year,” says Kerby. “A travel agent calls Delta 25 times a week. So who do you think has more buying power or more sway with Delta, and more of an indepth understanding of airlines and airline pricing? The agent does. So the agents are able to leverage relationships that they’ve carefully built over years, and you benefit from those relationships. If you don’t think you’re getting any benefits by leveraging those relationships, you’re wrong.”
Kerby uses GOGO as another example, which only services retail agents. GOGO has benefits that consumers cannot buy direct from suppliers, and they offer specific upgrades to agents to pass along to the general public. So, he explains, “That’s what the consumer needs to know—’I will get treated differently because of the channel I use.’”
In 2014, ASTA partnered with MMGY Global to prepare a research report called The Value of Travel Agents. They polled over 8,300 travelers who had booked at least one overnight stay in the previous 12 months. Of those, only 13.4% had used a travel agent. The most important statistic in the report for ASTA, however, showed that 41% of those who didn’t use a travel agent signaled that they were open to using a travel agent in the future.
“That shows enormous potential,” says Kerby.
To capture some of those consumers, ASTA launched a series of two- to six-minute segments on 145 PBS stations in 2014, reaching 4.1 million homes, which discussed the value of using an ASTA travel agent. In addition, ASTA’s consumer-facing travelsense.org portal in 2013 was getting around 30,000 hits a month. In 2014, that spiked to upwards of 66,000 views per month following a remarketing campaign with Google and heavy promotion of the MMGY Report.
ASTA is also helping educate small agencies about how to source corporate contracts in their communities, where they can get the travel business, for example, of a local law firm or manufacturer, and expand their operations into new markets.
“Those are the ways ASTA is right now pushing out our message and real data to consumers from surveys of both the public and our membership to help people understand how a travel agent can help them,” says Kerby. “The idea that it’s cool again to book with a travel agent has certainly taken hold in some pockets of the general public, but it’s still only 13% of consumers. For those 40% of the traveling public who said they were open to using an agent, they often don’t know where to find one, or they’re not thinking about them at the time of purchase. So our job is to push those numbers up.”
GOGO & Liberty
Randy Alleyne, president of GOGO, says the rise of OTAs initially in the 1990s was based on the consumer looking for more speed, so they gravitated to the online booking engines where they could do their own research on their own time.
“But I think as social media continues to expand, travelers are coming back from their self-governed travel, and they’re often talking about some of the things they found lacking in their own ability to understand the complexities of international and domestic travel,” he says. “In the last 18 months, there’s a growing swell of consumers that are looking for the expertise of a travel agent, because it’s almost a novelty again to have someone there who can put something together for you and service your needs when you need it. It transcends beyond the travel.”
Alleyne says there’s a “very robust” and growing segment of home-based agents operating on their own or within consortia groups like Virtuoso or Travel Leaders Group. He wants to shift their perception of travel wholesalers away from being merely “product and price,” so for 2015, GOGO is rolling out a new global sales platform to better educate its retail agent customers.
The platform gives travel agents clear analytics into their business performance trends month by month, and it’s shifting the sales process from in-person to remote.
“For business development managers (BDMs) to go and visit all 500 travel agents—giving them time for quality sales calls, giving them time to understand each agent’s business, building up their business case structure, giving them follow up support from marketing, IT, sales—they’ll be lucky to see every agent once in a calendar year,” explains Alleyne. “Now, BDMs can engage with them six-fold.”
Liberty Travel is the retail arm and sister company of GOGO. President Emma Jupp emphasizes that Liberty is a 24/7 shop where consumers can always reach a live voice at any time from anywhere.
“The customer more than ever wants to feel safe so we’re there before, during and after their journey, which I think is rejuvenating many travel professionals,” she says. “I think we also all have a limited amount of time these days, and typically customers are looking to us to talk through their options.”
According to Jupp, customers often want Liberty to validate their travel choices among what she says can feel like an overwhelming amount of content online. And while the Mexico and Caribbean package vacations still represent a large portion of Liberty’s business, Jupp says every year customers are becoming more adventurous with their travel goals to more non-mainstream destinations.
They’re also asking more specific questions about those destinations.
“Within our brand, we sent over 400 of our consultants on overseas educational trips in 2014,” says Jupp. “So it’s very much about the knowledge and service. More and more people want to deal with experts, and they also want their own personal travel agent who can serve them with a high-touch level of personalized service.”
Greg Oates covers hospitality and tourism development. Email him at [email protected]
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Tags: travel agents
Photo credit: According to the American Society of Travel Agents and Liberty Travel, agent bookings are on the rise because more travelers are seeking high-touch service in their stressful lives. Flickr