For all of their protestations to the contrary, many travel agents remain firmly in orbit around suppliers rather than their clients. After all, suppliers provide the vast bulk of the revenue generated by travel agencies and also do a superb job of marketing travel products to the public. During the early years of the cruise industry, many agents built their entire business plan around cruise line product. The industry experienced tremendous growth during the formative years and the public required the guidance of the agency community to differentiate between cruise lines and product offerings.
Nobody can fault the tremendously successful efforts of the cruise lines in educating the public. Consumers buy brands and the brands that advertise the most get the attention. Royal Caribbean, NCL and Carnival have done an excellent job establishing their brands with the public.
As the public has become more familiar with cruise product, the role of the travel agency distribution channel has evolved for the cruise lines.
Consumers who know what they want will gravitate to the most direct, inexpensive route of obtaining the product. This is the natural maturation of the market and like most maturing markets, it is less and less profitable all along the chain of distribution as the gross volume of product sold increases. Mass market cruising has become a well-known and easily understood product, even a commodity.
The results are inevitable and important for travel agents to recognize. Direct bookings by the cruise lines are up as might be expected in a more mature consumer market. This trend will continue and will not reverse itself.
The cruise lines have become massive entities with their own gravity. Like all business entities, they will operate in a manner most conducive to their own well-being. They will make mistakes, missteps and some poorly timed ventures, but they will do what is best for them. When their strategies work in favor of the travel agency distribution chain, that is a great thing. When their strategies favor other distribution chains, however, the pain felt by travel agents often issues in some ill-considered commentary.
The anger being displayed by travel agents is understandable, but misplaced and non-productive. To remain vital, travel agents need to begin generating their own gravity, orienting themselves ever more strongly with their clients rather than particular suppliers, acting as free agents in a market place dominated by fewer players.
Travel agents need to demonstrate some business craft at this juncture and move from the red oceans of the mass market cruise lines to the blue oceans of niche cruising and land-based tours. For those travel counselors not familiar with the term “blue ocean” and “red ocean” the concept is a simple one, borne out very well by the cruise industry. Over time, says blue ocean theory, markets mature, distribution channels streamline and become less profitable and the ocean turns red from the fierce competition. Smart competitors then move on to blue oceans where there is less competition, where their services are more needed and where the profit margins are better. Sound familiar?
Travel agents should take all of the energy that is right now expressing itself as anger and quickly marshal it to learn new product and to move on to new, more exciting markets. There is a literal world of destinations out there, and slews of tour operators with new twists on product, destinations and opportunities. Just take a look at the “Webinar” page on TRO’s site and look at how eager these tour operators and niche cruise lines are for your business. One of the upcoming webinars is titled “VOLUNTEER TOURISM.” Are your clients going to buy that type of complex, high-touch travel off the internet or do you think they will better appreciate your services in the selection of such a specialized travel program?
You don’t have to be angry, just do what everyone would expect. As you become less important as a distribution channel in one product, gravitate to more profitable product and marketing. Begin educating your clients about something other than mass market cruises. You don’t have to abandon the cruise market, but breaking free of the dependance on their marketing and revenue streams is a logical and important strategic move for most of the agency population.
One final note – learn to charge fees. The final evolution of the agency model to an orientation to clients will require multiple income streams. Fees will play an important role. TRO is sponsoring a series of marketing and sales webinars entitled “No Limits.” This week, the first No Limits webinar will feature Nolan Burris discussing, among other things, the role of fees. You can register for the No Limits webinar here.
The travel agency community has shown an amazing resilience and ability to adapt, but with each major sea change, a lot of blood gets spilled. This time, get ahead of the curve. Don’t worry about the mass market cruise lines, they will be fine. If they need your help, they will let you know by paying you for it. But don’t wait around any longer gnashing your teeth. Set your sights on blue waters and sail on.
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