Are Storefront Agencies Making a Comeback?

This is Part One of a two-part series on agency owners moving from home to storefronts.

Industry observers are seeing a modest uptick in the number of travel agents choosing to open storefront agencies. It’s not a reversal of the trend toward home-based agencies, but it is significant, in part because of the added visibility it gives the travel agency industry as a whole.

Dwain Wall, senior vice president of CruiseOne, said there has been a noticeable increase this year in the number of CruiseOne franchisees opting for brick and mortar locations.

“While the majority of our agents are home-based, there’s a definite micro-trend of new franchisees opening storefronts,” he said. “It’s a combination of newcomers and people who have been with us for quite some time.”

Also noticing an increase in storefronts is industry consultant Nolan Burris, president of Future Proof Travel Solutions. “There is definitely a resurgence of storefronts opening again,” he said.

Cautionary view
Burris added that the trend still lags far behind the number of agents choosing to work from home, a work style that is especially prevalent among those new to the business.

Research from PhoCusWright supports the observation that any hike in storefronts needs to be kept in perspective.

“Fewer than 5% of home-based agents are considering opening a location, while one in five leisure storefronts are considering moving to a home-based model,” Doug Quinby, senior director of research, told Travel Market Report.

PhoCusWright’s research also shows that “well under 10%” of U.S. travelers are using travel agents, he added. “So I do not expect to see a significant new wave of agency locations opening up.”

Second time around
The agents who are opening storefronts tend to be those who have done so before, Burris said. “It is primarily coming from those who were owners of storefront locations and had gone home. This is not happening among frontline agents.”

However, there is a possible impact on frontline agents. “Even a slight increase in  physical locations means that some of those home-based frontline agents will be recruited as employees.”

He also noted that an agent’s second brick and mortar venture may be quite different than the first go-round.

“Many are seeing the opportunity to operate a boutique-style travel consultancy, which is different than a traditional agency,” he said. “They tend to be higher fee-based operations where the focus is on service and pampering – not on bookings.”

Why is it happening?
The fact that commercial real estate has become more affordable to buy or rent, as a result of the real estate collapse and generally troubled economy, may be a contributing factor, Wall said. “In some parts of the country, the cost of commercial real estate is half of what it was five years ago.”

Also, he said, having extensive office space is less essential than it was in years past. “Some agents are doing very well with just a kiosk.”

Burris disagreed that cheaper commercial space is a motivator. “While the commercial rent is down compared to a few years ago, it can be harder for small businesses to qualify for the other things needed. The financial requirements from banks, landlords, insurance companies, bonding companies, etc., are actually stricter today.

“Thus, it’s mostly those who had operated a retail location before – and have a business credit history – who are doing it.”

Cheaper commercial space was not the reason Ed Brozosky, owner of a CruiseOne agency in Fort Myers, Fla., opened a storefront a year ago. But favorable conditions did make it possible to secure prime space in a high-profile building, he said.

“The rents were very competitive when we got in, so we’re in better space than we would’ve gotten otherwise,” he said.

Good for the industry
Regardless of the motivator, Burris and Wall believe that more storefront agencies are a good thing for travel agents as a whole.

“It increases overall visibility to the public and delivers the message that ‘we’re still here and viable,’” said Burris.

Storefront agencies are “a good billboard” for agents, according to Wall. “People see an agency on the street and they realize they can come in and talk to them,” he said.

Among agents who agree is Debby Hughes, who moved her home-based CruiseOne agency to a storefront in Big Bear City, Calif., in January.

“Most agents have moved home – and maybe that’s why some people think they don’t exist,” she said.

Next time: Two travel agents tell why they went from home to storefronts.