Travel outlook
The travel and tourism industry is better off than expected, after the 2001/2 dip in the market. Travel agencies must be vigilant to not lose their relevancy, however, a new study argues.
With so many consumers choosing to individualize their travels by booking trips online to get the better deal, travel agencies have an uphill battle for customers ahead of them. Travel websites have been able to generate up to a 20% market share in different regions, while the number of general travel agents has already dropped by 27% between 2001 and 2005. The recent introduction of a service fee for the booking of certain flights has also turned customers away, who then hunt for deals online, rather than relying on the advice of an expert.
In the meantime, online travel providers will see a jump in the market over the next five years, doubling or even tripling their market share, according to a new survey. Successful online providers are likely to move toward creating local points of sale or partnering with established retailers. Examples of this latest trend can be seen in the flight ticket sales and vacation package deals offered at high street supermarkets or event discount chains.
With so many consumers choosing to individualize their travels by booking trips online to get the better deal, travel agencies have an uphill battle for customers ahead of them. Travel websites have been able to generate up to a 20% market share in different regions, while the number of general travel agents has already dropped by 27% between 2001 and 2005. The recent introduction of a service fee for the booking of certain flights has also turned customers away, who then hunt for deals online, rather than relying on the advice of an expert.
In the meantime, online travel providers will see a jump in the market over the next five years, doubling or even tripling their market share, according to a new survey. Successful online providers are likely to move toward creating local points of sale or partnering with established retailers. Examples of this latest trend can be seen in the flight ticket sales and vacation package deals offered at high street supermarkets or event discount chains.
In a study prepared exclusively for the German travel agencies, Roland Berger Strategy Consultants expert Martin Streichfuss offers a fact-based assessment of the current situation and highlights trends for the upcoming years. He notes that travel agents have not been fast enough to realize their full potential. He underlines, for instance, that a growing market segment – that of the 'moneyed senior' – has not yet been sufficiently explored by most travel agents. Given current demographic trends, Streichfuss suggests tapping into this market as soon as possible. Many in this age group are not as internet savvy as younger counterparts and look for more traditional values in making their travel choices – the perfect niche for savvy travel agents.
Streichfuss also points to lessons that travel agents can learn from other industries. Banks, with their differentiated service modules for different types of clients lead the way in terms of responding to customer care needs. Partnerships with companies that offer different services under a larger umbrella organization are other examples the expert cites, pointing to the sales-collaboration between telecommunication firms Arcor and debitel, where ARCOR focuses primarily on online sales, and debitel proves its powerful outlet-network. Together they achieve wider spectrum of services, greater sales efficiency and are create higher market visibility.
Streichfuss also points to lessons that travel agents can learn from other industries. Banks, with their differentiated service modules for different types of clients lead the way in terms of responding to customer care needs. Partnerships with companies that offer different services under a larger umbrella organization are other examples the expert cites, pointing to the sales-collaboration between telecommunication firms Arcor and debitel, where ARCOR focuses primarily on online sales, and debitel proves its powerful outlet-network. Together they achieve wider spectrum of services, greater sales efficiency and are create higher market visibility.
Martin Streichfuss
Streichfuss also paints a clear picture of the future for travel agencies. The differences between the existing four point-of-sales specifications (i.e. direct purchasing with an airline/hotel; traditional travel agencies; discount travel shops and niche-marketing) will become more pronounced in the coming years. This competition creates a greater need for travel agencies to differentiate themselves and their offerings through targeted branding activities.
The more information there is available, the more savvy customers become as to exactly what they are looking for in their dream vacation. Thus, travel agencies must be willing to go the extra mile and offer the kind of service their clients demand. They must anticipate client needs and play on the emotional side of travel, while respecting individuality and cost constraints. Here, size of the diversification is key.
The future, Streichfuss argues, will be that of larger, centrally controlled travel organizations. By opting for a partnership with a larger organization, individual agencies can benefit from the in-house knowledge, purchasing power and a strong existing brand, while retaining their role as the direct client communicator, offering a full range of services (travel arrangements; insurance options) both before and after a trip.
The more information there is available, the more savvy customers become as to exactly what they are looking for in their dream vacation. Thus, travel agencies must be willing to go the extra mile and offer the kind of service their clients demand. They must anticipate client needs and play on the emotional side of travel, while respecting individuality and cost constraints. Here, size of the diversification is key.
The future, Streichfuss argues, will be that of larger, centrally controlled travel organizations. By opting for a partnership with a larger organization, individual agencies can benefit from the in-house knowledge, purchasing power and a strong existing brand, while retaining their role as the direct client communicator, offering a full range of services (travel arrangements; insurance options) both before and after a trip.
Others might choose to ally themselves with an online portal to present customers with an alternative to large tour operators. This strategy increases a firm's presence in the market, guarantees customer needs will be met and improves general operations, without creating additional costs associated with building a new brand.
For travel agencies to retain their relevance, they must position themselves clearly, choose their partners wisely, guarantee a high level of competence in customer service through experienced colleagues and anticipate the needs of their customers, by appealing to the emotional side of travel while offering a good cost-benefit/service ratio. If travel agencies react to the competition from online providers by partnering smartly and playing on their strengths, they will continue to be a relevant player in opening the door to that dream vacation.
If you have questions or comments regarding this or any other story, please don't hesitate to contact us:
For travel agencies to retain their relevance, they must position themselves clearly, choose their partners wisely, guarantee a high level of competence in customer service through experienced colleagues and anticipate the needs of their customers, by appealing to the emotional side of travel while offering a good cost-benefit/service ratio. If travel agencies react to the competition from online providers by partnering smartly and playing on their strengths, they will continue to be a relevant player in opening the door to that dream vacation.
If you have questions or comments regarding this or any other story, please don't hesitate to contact us:
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