Top supplier and agency executives foresee a vibrant future for retail travel sellers – provided both sides of the distribution equation collaborate to grow high-margin business, especially in more upscale markets.
That was the consensus among executives during a panel discussion about the state of the industry at last week’s 10th annual New York Times Travel Show in New York.
“Today travel sellers represent an effective distribution strategy. The real issue is looking at where the opportunities are,” said Tony Gonchar, vice president of the American Express U.S. Consumer Travel Network.
“It’s about being able to create high-value margin opportunities for both sides.”
Gonchar, former CEO of ASTA, suggested to agents and suppliers in the audience that they were most likely to find those opportunities, and prosper, by serving the upscale market. “If you are a luxury seller and buyer, there is a better potential to create value,” he said.
The role of agents
The executives dismissed talk about the importance to suppliers of consumer-direct online distribution, saying the trust between agent and client remains more valuable to suppliers.
“If I look at my own product, it goes to 60 countries. It’s a lot easier to use a distribution channel like agents and train them [than to develop our own direct channel],” said Larry Pimentel, CEO of Azamara Club Cruises.
“The question for senior officers is [how can our relationship with agents] be better?” Pimentel asked. “We’re all looking for the most revenue we can, so [agents] can be better paid,” he added.
By offering value to both consumers and suppliers, agents are uniquely positioned in the industry, others said.
“Agents are not overhead [for suppliers]. They are paid when something is consumed,” noted Gonchar. “What a great model for a [supplier] to have at its disposal.”
Customer service shifts
The relationship between agent and consumer may look different in years to come, but it will remain core to travel distribution overall, asserted John Lovell, president of Vacation.com.
For instance, he said, the ways in which agents create value for travelers is evolving. “Value might be being online at midnight to answer a question when a consumer is seeking a product online,” said Lovell.
For today’s agents, a key issue is making themselves visible to – and connecting with – travelers. “You need to be in every distribution channel out there,” Lovell told agents.
“The travel agent needs to link himself with the consumer. Consumers are having a hard time finding the travel agents. It comes down to social media and where that’s going.”
Agent value in a DIY world
Pimentel noted the importance for agents of finding customers who will benefit from and value their expertise. Those customers are probably not among today’s price-focused do-it-yourself bargain hunters, he suggested.
“There are certain consumers who have had bad experiences and want to do their own thing. You have to live with some people who are going to do their shopping online. But most need you to interpret things for them.”
Panel members noted the increasing importance of education for agents. As discount options proliferate online, agents were encouraged to embrace education as an essential differentiator.
“The most successful sellers are educated about what they’re selling. You can’t win with low price,” Pimentel said.
To succeed, all branches of the travel industry must refocus on consumer needs, panelists agreed. “The consumer must win – or we all lose,” mused Pimentel.
Consortia and suppliers
When the conversation shifted to a high-level discussion of the dynamics between travel suppliers and consortia, panelists agreed that both sides have benefitted from increased demand in recent years.
“I think the relationship between consortia and travel operators is better than ever,” said Steve Gorga, president of Travel Impressions. “To be successful after all these years, you have to be smart about running your business, and as the years have progressed, we’ve all gotten better.”
Travel agency consolidation, which has squeezed out small and medium-sized travel sellers, was called a positive for the industry overall – and for travel agents in the long term.
“Consolidation is a good thing; the stronger continue to get stronger,” said Lovell.
“Contrary to predictions, travel agent distribution is alive and well. We see a very healthy future for the distribution channel, and that’s where we’re investing our money,” Lovell said.
The wide-ranging panel discussion was moderated by James Shillinglaw, editor in chief of travAlliancemedia.