Travel Agents Gain Ground As Suppliers, OTAs Duke it Out

by Andrew Sheivachman

NEW YORK-- MMGY Global’s annual Portrait of American Travelers (POAT) report finds that demand for travel is higher than ever while consumers’ use of traditional travel agents has risen for four years in a row.

“There has never been a more positive outlook for the demand for travel services,” said Peter Yesawich, vice chairman of MMGY Global, at a press conference here to release the latest annual POAT. “There is nothing in the future that could disrupt that, except something we can’t control.”

Reports of the demise of the travel agent, also, are contradicted by the survey findings. Year-over-year increases in agent usage show that agents’ experience and knowledge remains important to U.S. travelers.

“The percentage of travelers who report they’re using the services of a traditional travel agent has risen for four years straight,” said Yesawich. “The highest rate of growth of traditional travel agents is among millennials.”

The combination of a strong U.S. economy, strong dollar and consumer confidence has created a fertile environment for travel sellers.

“It boils down to optimism,” said Yesawich. “The sentiment of consumers has become, over the past three to four years, much more optimistic than ever before. This is what’s driving interest in leisure travel in particular.”

Millennials are staying home . . . for now
The 25th annual POAT survey, based on responses from 2,832 American adults, finds that millennials are already having an influence on the travel industry.

In 2015, there are more millennials (ages 18 to 35) than there are baby boomers in the U.S. More than half of millennials, however, will choose a staycation over a vacation this year, the report said.

Despite the stereotype of millennials being adventurous and thrill-seeking, data indicates they share the same number one vacation priority with boomers: relaxation.

“Millennials and boomers have a differing view of the world,” said Yesawich. “But relaxation is the number one motivation for travel, regardless of generational cohort.”

What millennials want
As millennials become more entrenched in the workforce, however, they are more likely to travel, according to MMGY Global.

About one-in-three millennials are planning to take more leisure trips in 2015 than they did in 2014.

“Not only are millennials a significant market force, the optimism they sense in their personal and professional lives is driving this demand,” said Yesawich.

Spelling good news for agents, almost half of all millennials are interested in taking a cruise vacation in the next two years. They now show the highest growth of interest in cruising, tied for matures for most interested in cruising.

It appears that cruise lines have done an effective job of marketing to younger travelers in recent years.

Vacation spend is increasing as well, according to the report. Millennial families plan to spend an average of more than $6,000 on vacations over the next year, a 19% increase over 2014.

The shifting online marketplace
Big changes have hit the digital space in the last year, with supplier brand websites beginning to outduel OTAs for consumer bookings.

In 2014, 84% of American travelers looked at an OTA when travel shopping. In 2015, 58% did so.

Similarly, just 13% of travelers who regularly look for information on an OTA, booked their reservation on the site in 2015. In 2014, 36% booked on the OTA.

As metasearch sites like Kayak become more popular, share is being shifted away from the traditional Big Three OTAs.

Battle of the brands
The data presents a picture of an online travel landscape where brands have been successful in convincing consumers to book directly.

Consumers said they believe they will get the best price when booking direct, and that they find booking direct more convenient than using an OTA, the report found.

“One of the biggest challenges the OTAs have today is that they have a leaky bucket,” said Yesawich. “They have people abandoning their site to book at”

An important takeaway for agents has to do with the large decrease in hotel bookings overall.

Millennials enjoying staycations and embracing the sharing economy through services like AirBnB, have most likely led to the decrease.

“There is a general degradation in hotel usage,” said Yesawich. “It is most pronounced among the [millennials, who are] a little more whimsical and have a high interest in travel.”

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