In UK, nearly 700 agents closed shop in 2017 alone, according to a report which cited overwhelming competition faced by brick-and-mortar travel agents from online travel agents (OTA). In Singapore, about 280 travel agents closed down in the last two years for a variety of reasons but mostly due to the aggressive competition online and changing consumer preferences.
“To survive and thrive, retail travel agents need to change and adapt. This is where technology will play a very important role in the future of this transformation. Technology is exponentially evolving, and we need to keep learning and updating ourselves to better serve travellers”, according to Amadeus report on Future Of Retail.
Many travel agents do want to change and adopt technology, but many don’t know where to start or how to adapt. From Singapore, Thailand, Philippines, Malaysia and beyond, my experience with travel agents on this matter has not been good, mostly. Some are unprepared to do so because of fears about technology and costs.
An agent in Thailand contacted me late last year to help it move to adopt digital technology to stem their declining travel business. The problem was they thought a new website would do the job. Some don’t want to absorb credit card charges for online bookings. Others will say they offer online travel bookings, but the reality is they have staff manually processing the booking at the back end. This is a typical “cosmetic syndrome” – externally trying to show change but in reality, it is business as usual.
Unfulfilled aspirations
Since 2015, there have been several media reports indicating travel agents across the region were all committed to moving to digital.
Here are some of the views expressed then:
“Tour operators have to restructure and remodel their businesses” said a spokesman for one country’s travel agent association.
“Our target audience for traditional travel has changed. We are now focused on customising tours for the elderly and for family groups. We are looking for ways to get the younger lot back,” said one travel agent.
“We are aggressively embracing technology, innovating product offerings and payment solutions besides increasingly banking on loyalty programmes. It is not easy for smaller players to compete,” said a manager of a big travel company.
We are now into the second half of 2019 and despite all the early keen intent, more travel agencies have closed their doors because they have not been able to adapt fast enough to meet changing trends.
One of the biggest obstacles for travel agents to go digital is they lose their incentives from the huge GDS (Global Distribution Systems) companies upon which travel agents access airline and hotel suppliers inventories. So while they want to go digital and be able to offer rich content to customers, they are held back by the likely loss of the GDS incentives requiring agents to meet booking targets. In fairness, the GDS’ companies are themselves trying to help agents with new products to help them go digital, but at some cost to agents.
According to the Treksoft Travel Trends report 2019:
1. More people are shopping and buying via mobile devices
Google conducted a study with PhocusWright in 2018 to discover how mobile phones are used by potential travellers. Findings of this study confirmed that researching destinations, hotels and airfares on a mobile device, is now as normal to users as online shopping.
Customers are comfortable researching, booking and planning their entire trip to a new travel destination on a mobile device. Top consumer markets displaying this trend include India (87%), Brazil (67%), Japan (59%), South Korea (53%), US (48%), Australia & United Kingdom (45%) and France (44%).
Mobile devices also lead to a greater propensity to book at the last minute. Google Data shows that travel-related searches for “tonight” and “today” have grown over 150% on mobile, over the past two years.
2. More people are buying tours in-destination
Skift’s Research found that 35 percent of travellers have used mobile phones to book a tour or activity while already in-destination for a vacation, whilst Phocuswright found that 38% of bookings are made on the same day or two days before a trip is made.
Help is available
There is already help available for travel agents to go digital: from software companies providing solutions on subscription SaaS basis, and even government grants in some countries like Singapore to help them make the change. But from personal experience trying to help agents, many do not understand how technology works or are unwilling to accept that some investment is needed to adopt digital solutions. Some bemoan the fact that they had invested heavily in the past to create their own websites but didn’t see incremental revenues as a result. They also claimed they incorporated the web booking engines provided by GDSes but the online bookings they secured were insignificant.
What’s the future for such travel agents?
First, travel agents need to consider injecting “new blood“, people who understand digital technology and can champion change. This will obviously be a challenge as most travel agency owners are hands-on and often won’t let go.
Second, the various national travel agents’ association can do a lot more to a) educate members, b) vet and shortlist solutions providers so members don’t have to navigate the minefield ignorantly, c) help some members to pilot a few solutions with support from some providers.
Lastly, travel agents should opt to reduce dependence on their legacy revenue model, making some money from selling air tickets and hotel and instead offer experiences that command better margins.
Changing preferences
The Amadeus report says “Shopping is no longer the same as buying; travellers want to be inspired, moved or changed in some way, regardless of whether that’s online, in-store or on social media,” its report explains. “Retail travel agencies of the future need to offer a new agency experience. It’s not just about selling the holiday.”
The Treksoft report highlights the top three travel preferences in recent times:
1. A request for unique experiences
Tour operators are now receiving requests for unique experiences from travellers who want to do something that is a once-in-a-lifetime. This is becoming more common amongst millennials who want to explore the world and share their stories with others.
2. Ecological tours are in demand
Interestingly, ecological tours are the most popular tours offered by many tour & activity operators who responded to our 2018 Tourism Survey. These are usually rare experiences that educate and share inside information on the area, and how to protect it for the future. Tours that use proceeds to fund ecological projects such as forest or animal habitat restoration are chosen above alternatives without a cause.
3. Local experiences
Travellers are choosing to become more immersed in the local culture when visiting a destination. They want to do what the locals do and eat where locals eat. Airbnb Experiences is offering a solution where travellers can book a local experience with a destination native.
To specialise or not
Indeed, legacy travel agencies that continue to survive focus on experiences and are very clear on their market segment focus.
Take ELDERTREKS, a Toronto-based travel agency. It has successfully marketed itself as “the world’s first adventure travel company designed exclusively for people 50 and over”. Established in 1987, ELDERTREKS offers active, off-the-beaten-path, small-group adventures by both land and sea in over 100 countries. What is interesting is its website even gives a good profile of their 35 tour leaders around the world and the dates of tours each has lead, offering potential customers a level of assurance.
Corporate travel is another segment more travel agents are focusing on to survive because of higher margins. But as competition in corporate travel heats up, more travel agents will invariably go digital to remain competitive and offer more mobile booking capabilities.
A reasonably-sized local travel management company I assisted in Malaysia, decided to go “digital” when they became aware that since 70 per cent of its corporate travellers booked simple, roundtrip travel, it made no sense not to go digital and let the travellers do their own bookings. This enabled its in-house staff to handle more complicated requests. The internal change process wasn’t easy, but the outcome of also winning new and fairly substantive business going digital justified their move.
Industry adoption helps
In Indonesia, a fast-growing company, OPSIGO, has successfully helped hundreds of travel agents modernise by offering them connectivity to what is termed in the industry as “New Distribution System” – based on IATA’s NDC (new distribution concept) standards.
Transactions can be conducted electronically and agents are able to get rich content to push to their customers. With the system, agents have access to an array of budget carriers’ and hotel inventory instead of dealing with individual airlines separately or through legacy systems. Payments are integrated with local banks and payment systems. No more cheques, separate bank transfers and cash transactions.
These Indonesian agents are benefiting from being on the OPSIGO platform because of its ease of use and good functionalities. OPSIGO will soon be providing agents with the capability to digitally supply OTAs and other agents with their own travel products.
I believe travel agents who adapt will be able to survive ultimately amidst the evolving landscape and changing preferences. They will need help from their travel associations and solution providers. They would need to perhaps also refine their business models and look more at aggregating resources. There are obstacles for sure, but if they bravely work at overcoming them, they will survive.
Gerry Oh is the Founder of TRN Connect
