Travel Agencies Are Gearing Towards Change

Mar 30, 2016 | News

Written by Howard Slutsken

APEX Insight: In a panel discussion at last week’s UATP Airline Distribution 2016 conference in Vancouver, BC, a group of experts discussed the future of travel agencies in the age of technology and social media. It’s been barely a decade since the Internet revolutionized the way travelers could find and purchase products — a change which had, and is continuing to have, a dramatic impact on agencies.

Travel agencies are experiencing the same sea change that’s being seen in many other sectors, thanks in large part to new technologies and social media. In a panel discussion at last week’s UATP Airline Distribution 2016 conference in Vancouver, BC, a group of experts– including Mike Premo, president and CEO, Airlines Reporting Corporation, and James Kinnard, director of Strategy and Analysis, Expedia ­– discussed the industry’s successes, challenges and future.

There are now about 12,700 travel agency locations in the United States, down from more than 30,000 in the mid-1990s, according to Mike Premo, president and CEO, Airlines Reporting Corporation (ARC). “Although there’s a large drop off in locations, the number of transactions sold through ARC agencies has fluctuated somewhat, but has stayed [at] roughly 150 million tickets per year,” says Premo. “Clearly, there’s been lots of consolidation, but the business didn’t go away. Agencies closed locations that weren’t profitable, and they merged and consolidated locations.”

It’s been barely a decade since the Internet changed the way travelers could find and purchase products and that has had a dramatic impact on agencies. “If, as an agency, your [only] value proposition was to get people to buy airline tickets [or] to help people book a hotel or a rental car, you couldn’t adapt to this new world and find ways to add value, and you really became obsolete,” says James Kinnard, director of Strategy and Analysis, Expedia. “I think we saw more and more successful agencies finding a niche where they could play. That was not easy to duplicate by just having information.”

Smaller agencies have been faced with making changes, according to Barbara Sutherland, Alberta/Northwest Territories regional manager, Association of Canadian Travel Agencies. “A lot of the smaller ‘mom and pop’ agencies are joining consortiums. This is where they’re getting their buying power. What we’re finding more and more is the gearing towards education and towards growth in the knowledge of what a travel agent does,” says Sutherland. “We’ve gone from calling them an “agent” to an “advisor.” And that is really the key here. These people are specializing and they are advising their customers.”

“The more experiential the trip, that’s when they’re going to look for that advice, that expertise,” says Kinnard. He explained that Expedia receives very few customer calls for simple flight bookings, but 85% of cruise bookings are made with an advisor. “The data shows that something like 70% of international trips are still booked by travel agents,” adds Premo.

The combination of the now-ubiquitous smartphone, data mining and advanced customer support software presents some great opportunities for agencies. “It’s all about the personalized offer and the intelligent application of technology,” says John Beauvais, president, Flight Centre Travel Group Canada. “It’s about surprising the customer, and having the customers receive offers that fit their preferences. It’s all about mobile capabilities not just for the traveler, but also for enabling our people to deliver the solutions anytime, anywhere. There’s such great innovation occurring.”

Travel bloggers have had an impact on the industry, and panel moderator, Greeley Koch, executive director, Association of Corporate Travel Executives, says that even that recent internet phenomenon is already evolving. “There’s a new type of travel blogger, and that’s those within companies. We’re starting to see travel departments finally get it, where they’re trying to become very engaged with their travelers, from a corporate traveler perspective,” says Koch.

In order to stay financially secure, agencies should be educating the consumer as to why fees are necessary, according to Sutherland. “What service industry can you go to and not pay a fee for the person’s time?” she says. Beauvais echoes her comments. “People will pay for service, for expertise that’s better than what they can do on their own,” he says.

So the future of the travel agency sector looks positive, according to Mike Premo. “It’s a great industry,” he says. “People have been looking for advice since Marco Polo got back from China. And that’s not something that’s going to change.”

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