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Photo by saaton/Shutterstock
Travel advisors are booking more business than ever.
From a surprising truth about OTAs to the importance of top-notch service, what travel advisors and agencies need to know in 2019.
According to ASTA (American Society of Travel Advisors), the American travel advisor industry saw $116.8 billion in sales last year. In a 2018 Phocuswright survey, 61 percent of advisors said they saw an increase in business, and 83 percent said they feel positive about the future. (Only 2 percent said they have a negative outlook.)
Even with this success, the industry is facing key issues. These are some of the trends AFAR Advisor will be keeping you up to date on going forward.
The conventional wisdom holds that consumers don’t even know travel advisors exist anymore—that everyone is booking with online travel agencies (OTAs).
But OTAs are not as great of a threat as you might think, says James Shillinglaw, editor in chief and founder of Insider Travel Report: “There is a misconception that there are many OTAs, but the number of OTA companies is now effectively two with Expedia and Priceline essentially focused on one segment of the market: large-volume production of hotel sales. They even hire thousands of reservations personnel that you can speak with directly or their own travel advisors.”
Successful advisors have made a place for themselves by cultivating clients who travel often and are willing to pay for exclusive access and expert knowledge.
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Over the past 10 years, the number of advisors working as independent contractors (ICs) has skyrocketed to 62 percent, according to a survey by the Travel Institute. Similar to real estate agents, they work for themselves and pay a percentage of profits to a “host” agency that provides the advisor with branding, technology, marketing, and accounting support. For the ICs, that means more autonomy and freedom but less job security than they might have as a full-time agency employee.
While agencies avoid some of the costs of having full-time employees, they struggle to maintain their standards of service, with fewer advisors in the office to meet suppliers, and to retain advisors who may be tempted to join competitors. In response, agencies are coming up with new ways to incentivize strong travel advisors to join—and stay with—their teams.
ICs will continue to shape the industry and the relationships between advisors and agencies, their clients, and their suppliers.
The idea of a career as a travel advisor is sexier than ever. But being a travel advisor can be a high-risk, low-margin business. “It appeals to people whose lifestyle is about the travel space,” says Jack Ezon, CEO and founder of Embark, a new travel agency. “They love it, and they’re trading compensation for lower travel costs. But that’s not everyone.” Will the industry be able to find, train, and retain people who know the world in an in-depth way?
“Every agency, no matter how big, is made up of Scotch tape and glue,” Ezon says. “Archaic technology plagues this industry. There is no good CRM [customer relationship management] at the hotel, consortia, DMC [destination management company], or front-line advisor level.” Many advisors and agencies cite ancient CRM systems as a challenge. CRM is a basic building block for personalization and client service, and today’s “solutions” are clunky and ineffective.
“We’ll be obsolete if we stay in the transactional business,” Ezon says. “Artificial intelligence is going to displace a lot of people. We can’t simply trade on room nights, just as hotels can’t trade on furniture. Clients are paying for soul and the emotional connection.” Building human relationships with clients and suppliers has never been more crucial. And the advisors who can do that successfully have the chance to thrive even more, helping their clients navigate a world of information overload.
Shrinking, uncertain commissions. Lousy service that can undercut a travel advisor. A lack of understanding of how valuable a travel advisor can be. Some suppliers just don’t get it. Which makes the ones that do all the more deserving of an advisor’s business.
The best suppliers and agencies realize they are in the market together, Shillinglaw says, and together deal with issues. “Travel advisors still produce the best yields for suppliers, much more than the OTAs,” he says.
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It used to be that a travel advisor could work with a DMC to put together a weeklong trip to Italy for a client, charge them $10,000, and that would be the end of the story. Today’s customers want to know exactly what they’re paying for. “I’m generalizing, but baby boomers typically don’t want to get bogged down in transparency,” Ezon says. “They just want it all included. But millennials and Gen X-ers will tell you to send them a color-coded Excel spreadsheet with the cost breakdown. It’s not about the money, it’s about the value that they’re getting.” Some suppliers have adapted to the demand for transparency, but many are still holding out.
Travel advisors still sell airline tickets—and more than you might think. But it’s still a low-margin point of sale, depending on how the agency structures it. Shillinglaw notes that roughly 50 percent of travel agencies and advisors are selling airline tickets. The best travel agencies do a great job of selling high-end business-class and first-class tickets, which is very attractive to airlines. The airlines are now showing up to conferences with full sales and marketing teams to work with advisors, but it remains to be seen if this new strategy will motivate advisors to start selling air or to sell more air.
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