This is part one in a series on trends surrounding online travel agencies
While traditional travel agencies and OTAs have long been considered arch rivals, there is increasing overlap and even interplay between them.
At the same time, indicators are that the two sectors still largely serve two different customer markets.
Fully 20% of leisure agents consult OTAs when making arrangements for their travel clients, according to the travel research firm PhoCusWright. And growing numbers of travel sellers are signing up for the travel agency affiliate programs offered by several OTAs.
For their part, OTAs ventured into traditional agency territory several years ago by offering live customer service.
Expedia’s offline service
Among them is Expedia, which offers consumers the option of picking up the phone and speaking with a live agent 24 hours a day.
“A significant number of people find it helps to speak with a customer service agent to help them to complete a booking, for example walk them through an itinerary, check cancellation policies and finalize payment details,” Diego Pedrani, director of travel agent distribution for Expedia Worldwide, told Travel Market Report.
Post-purchase changes and cancellations also account for a “meaningful percentage” of customer service calls,” he said.
However, offline bookings still account for a minority of transactions, a situation not likely to change any time soon, he said.
The live customer service option is not a strategy for gaining market share from traditional travel agents, Pedrani noted, adding that OTAs “recognize that offline agents offer a unique personal service and destination knowledge.”
While offering offline service helps drive incremental sales, the key demand driver for OTAs remains the consumer shift from offline to online channels, according to Pedrani.
“OTAs do not usually attempt to drive offline sales at the expense of online,” he said.
Two different markets
Even with OTAs’ offering offline service, travel agents are protected because they serve a different market, according to research by PhoCusWright.
The research indicates that consumers book with traditional travel agents when they need specialized services or are planning international and other more complex trips, while OTAs cater to more price-sensitive travelers.
“OTAs are about price, volume and getting that margin by squeezing more transactions in,” said Douglas Quinby, director of research for PhoCusWright, adding that for leisure travel agencies in the U.S. today, “it's really about customer service and trip complexity.”
Among the major differences is that customers served by traditional agencies tend to be older than those served by OTAs, Quinby said. “On average, agents tell us two-thirds of their customers (67%) are 45 or older, and 32% are at least 60 years old.”
They also tend to spend more – “at least when they book through agents,” he said.
Meaningful role for agents
Even the OTAs recognize the strengths of traditional travel agencies in handling certain types of travel.
“Most straightforward travel plans can now be booked through the Internet with ease, though many types of complex travel arrangements, such as multi-segment itineraries, can pose challenges to consumers booking online, and are still very well served by offline agents,” said Pedrani.
By working to increase transaction volume, OTAs continue to cede ground in segments where customer service is important.
“Travel agents still play a meaningful role for many travel consumers looking to book an important trip, and can definitely add value in that capacity,” said Pedrani.
“Their specialty is the complex itineraries where travel shoppers are looking for a bit more handholding, and that’s a huge value proposition for offline agents.”
Next time: An update on Expedia’s affiliate program for agents.