So this is what extinction looks like. When I came into this industry back in 1996, a financial advisor said that the industry’s days were numbered. When the commissions were cut—same deal. 911—yup. SARS—yup. Throw in a few wars, and an unending recession and surely we should have been extinct. Right?
Well, here we are in 2012 and while the industry is a bit bruised and battered, we are here and ready to tackle 2012. Of course the recession will be ongoing; but will 2012 bring us natural disasters, man-made ones, disease, or even another war? Perhaps, but if nothing else, we should be well prepared.
In addition to all the end of year planning I do, I have also done a great deal of crystal balling for 2012. If nothing else, the travel industry is rife with change and attempting to look into the future, I feel, helps you prepare you for the unexpected. So what pitfalls might come out of 2012? Here are my thoughts. Please let me know yours!
The Good Stuff
Less competition. Study after study shows that consumers are getting tired of the online travel agencies–certainly not enough to eschew them entirely; but enough to move a significant bit of market share back to the human side of the industry. I would not be surprised to see at least one of the big three agencies call it a day. But, that is not to say that the agency will not be around in a different form and much smaller.
Continued demand. People will travel. Even though times are tight, people will find a way to travel. It may not be as extravagant as it once was, but they will travel. Agencies have an opportunity here to fill that demand.
Better partnerships. Some suppliers will come to fully understand the value that agencies bring to the table. I think that 2012 will bring a bit more transparency to the industry with suppliers and agents sharing their unique and shared needs to work to true mutual success.
The Bad Stuff
Worse partnerships. And unfortunately, there will be some suppliers who will become worse partners for the agencies that represent them. You will see a more obvious push to direct to consumer sales, lower compensations, and less flexibility. To work with these suppliers, you will need to be on your “A Game” every day and hope that a favor is never needed.
Lower pricing. The worldwide recession has no obvious end in sight. It will ebb and flow for the foreseeable future and to remain in demand, suppliers will need to keep pricing down (and NCFs high) in order to meet their goals. While this makes for a challenging environment for an agency, there are opportunities here for ancillary revenue—insurance, sightseeing tours and shore excursions, service fees, destination guides, etc. Develop your additional value and bring it to the table.
And, if by chance the TSA does not stop the next terrorist attack on American soil—all bets are off!
10 thoughts on “So, this is what extinction looks like”
I’d also add that if the Mayans were right, all bets are off. 😉
LOL….Agreed!
Dear John:
I firmly believe that serious travelers need expert travel advisers more than ever. Our niche travel business is flourishing because we have carefully taken the advice of industry gurus and info we have obtained from pros such as you! We have even just finished the process of joining a distinguished consortium, something TRO has recommended for years.
So my list is this:
1. The good stuff: people desire to go to more and more “off the beaten path” destinations — those destinations where they definitely need expert advice and assistance; demand is up for more unusual modes of travel (such as trains); consortia are offering more and more training and assistance to up the game of every professional travel adviser member.
2. Suppliers need advisers more than ever – to bring to the table experienced travelers who want to spend money for the “trip of a lifetime.” These travelers do not enjoy scrounging around for phone numbers, web sites, emergency numbers. They want one phone number to call and one email to send — to the experienced adviser offering concierge services.
3. Rates of satisfaction: People who book online have dramatically lower rates of satisfaction with the process than those who book with a knowledgeable adviser. For our travelers, the exciting and fun journey begins with the first phone call or email.
Sincerely,
Eleanor Flagler Hardy
President
The Society of International Railway Travelers
I agree…certainly with a niche business like rail the expertise is invaluable.
John,
As a storefront agency, we are finding increased interest in sitting across the desk from a live person to plan a vacation. That’s in our favor as the closest other storefront agency is more than 10 miles away.
Will be interesting to see how 2012 pans out. So far sounds good!
John, as an aside, this year we have the same number of agencies in the US that we did in 1978, post-deregulation and pre-GDS. So we are back down to just over 14,000 agencies, from a high of 47,000 agencies in 1996. So there are 33,000 agencies that indeed are now extinct. But the remaining agencies are no slackers. They are producing $77b in annual air ticket sales, compared to their 1978 counterparts, who produced just $11b. You can thank the online agencies for much of that, as they represent 30% of domestic air sales and 16% of international air sales.
New models will emerge in 2012, such as http://www.travelingtogive.com, which donates 5% of profits back to a featured charity, challenging the traditional online players to give back. Also, new players that are outside of the travel industry will embed travel capabilities in their sites, getting people at the point of sale for things like event tickets or planning a wedding or funeral.
I am not sure 33K are extinct at all. Certainly there are less locations and there are some extinct ones. But many of those agencies that were around in 1996 have gone home (and may not be counted) or merged with other entities. When I had my brick and mortar locations, we had 3 retail offices and 3 onsites. So if you looked at my agency you would say that when I sold it that 5 of them went extinct. The business was still up–we just were working smarter. Yes we closed offices, but we were not extinct.
We are a storefront agency too. We have seen and heard our clients stories of trying the travel websites, but have returned for various reason such as sitting face to face and building the client/agent/store relationship, trust, honesty, our vast experience and caring about them. Many have been hurt or taken and we don’t treat them as just another number or another sale, they become like family!
Thumbs up!