Growth of Independent Agents Is Reshaping the Industry
by Robin Amster /The continued growth of independent travel agents is leading to new business models that promise to strengthen the agency community, according to Ann van Leeuwen, president of the National Association of Career Travel Agents (NACTA).
Van Leeuwen identified several key trends shaping the travel agency industry:
• Smaller brick and mortar travel agencies are reducing their employed staff, choosing instead to work with more independent contractors (ICs), and in some cases, exclusively with ICs.
• ICs, some working with the same host agency, are forming their own loose, informal networks.
• Host agencies – and NACTA – are stepping up their game in terms of providing services and support to their independents.
Fueling the trend
The shift by smaller agencies to greater use of ICs and reduced reliance on staff agents, often allows agencies, particularly those that are struggling, to stay in business, while maintaining a relationship with valued former staff agents.
“Some of those that are really struggling might go to [being] a true host agency,” van Leeuwen said.
“We know that about 14% of agencies in the U.S. and Canada are not profitable,” said van Leeuwen, citing ASTA’s Agency Sales & Revenue Trends for 2013.
“We can assume that this percentage of agencies is looking to cut costs and may look to host agencies, or may go out of business leaving their agents to consider going independent or becoming unemployed if they can’t find other jobs.
“This is a considerable number of agencies and is enough to fuel new business models,” she said.
The move to independents
NACTA’s membership has grown to 1,800, van Leeuwen said.
According to the just-completed 2014 NACTA Independent Agents Report, slightly more than half (52%) of NACTA’s agent members are hosted ICs.
More than one-third (36%) are fully independent agents, meaning they are not affiliated with a host agency or a franchise organization. These independent agents are small business owners who deal directly with suppliers.
Ten percent of NACTA’s agent members belong to a franchise, and 2% are employees.
The majority of NACTA’s members – 86% – work from home, according to the report.
Hosts’ support
Host agencies are responding to the increasing number of ICs by stepping up their game in providing services and support.
Some are adding programs to help small agencies transition to new business models, according to van Leeuwen.
“The large hosts are adding programs that help smaller agencies with back-end support, and they can offer [commission] override schedules,” she said.
Host programs are often “very robust and can help some of the smaller companies stay in business,” van Leeuwen said.
NACTA too is expanding the resources it offers its ICs. (See sidebar)
ICs are ‘highly networked’
Independent agents meanwhile are becoming “highly networked,” van Leeuwen said.
Networking is a way for independents to share and exchange expertise, with agents filling in the gaps in each others’ knowledge of a particular niche.
Networking is also central to NACTA’s member benefits, said van Leeuwen.
‘Special ingredient’
She called NACTA’s chapter system its “special ingredient.”
The organization’s 42 chapters across the country enable its members to connect locally to share information and experiences and even work together on shared bookings.
NACTA also offers the NACTA Agent Digest, a daily online communication where members can connect, share information and post comments.
“For travel consultants to know everything is impossible,” said van Leeuwen. “A NACTA consultant can’t be everywhere so they can rely on a peer.
“That’s especially true now because [ICs] are diversifying what they sell and are selling more high-end FITs, custom trips and boutique hotels, not just mid-market travel or mass market cruises.
“They have to make sure the client is satisfied and do what’s right for their business,” said van Leeuwen. “The two are interchangeable.”