Year in Review: A Look at the Top Stories of 2012
by Maria Lenhart /The year got off to a rough start for the travel industry, with the sinking in January of the Costa Concordia, an event that set the cruise industry on its heels for much of the year.
Other headline-making travel-related disasters – notably Hurricane Sandy – served to reinforce the value of travel agents. The consumer press took note, as reflected by countless news stories and commentaries suggesting that earlier news reports of the death of travel agents were decidedly premature.
For Travel Market Report readers, hot topics in 2012 included IATA’s controversial new distribution plan, agent reaction to the contentious presidential election, airline woes and Carnival Cruise Line’s changes to its commission structure and fare codes. Reader interest was also sparked by stories giving tips on using social media.
Here’s a look at Travel Market Report’s top stories in 2012.
1. Agent Groups in Uproar Over IATA Distribution Plan
A report in October on IATA’s New Distribution Capability plan was Travel Market Report’s most clicked-on story by far. Agency groups, including ASTA, ACTA and the World Travel Agents Association, expressed strong concerns that NDC will upend the current distribution model, bring an end to price transparency and threaten agents’ revenue.
NDC would make it possible for airlines to create personalized airfare offers, along with ancillary variables, based on customer data. The personalized fares would not be filed with ATPCo or the GDSs. Rather, the GDS would provide the airline with the customer’s identity, and the airline would assemble the offer.
Particularly incensed over NDC was ACTA president David McCaig who told agents at an industry conference, “You can kiss your GDS booking incentives goodbye. It’s the most significant threat to your income since the airline commission cuts.” (See also, Agent Group Fears Access to Client Data Under IATA Plan, Dec. 6, 2012.)
2. Agents Divided Over Obama Victory
Just like much of the rest of the country, travel agents were divided on whether President Obama’s re-election is a positive or negative outcome.
Some agents said that because clients fear rising taxes under the second Obama administration, they are likely to book trips in the short-term – while they still have the money to do so. Several expressed relief that the election was over, adding that clients were also relieved and were now likely to go ahead with travel plans that they had put on hold before the election.
Others noted that despite an estimated $6 billion spent on all the various election races, the status quo has been preserved, with a Democrat still in the White House and Congress still split down the middle.
3. Carnival Commission Changes ‘Hits Hard,’ Agents Say and Carnival Adjusts Fare Codes, Irking Some Agents
Two articles relaying agents’ often heated reactions to Carnival’s commission and fare code changes struck a chord among readers.
In September, Carnival set new sales thresholds for agents and revised its volume-based formula for calculating agent commission levels. In the new plan, which goes into effect on Jan.1, 2013, agent volume will be measured by net cabin sales, rather than using the previous “seven-day equivalent” formula, which was based on number of guests booked and cruise length. Mid-sized cruise-selling agencies are expected to be the ones most negatively by this change, agents said.
Then in November, Carnival announced revisions to its fare codes, effective on Dec. 3. The new pricing program includes four new fare categories, as well as changes in terms for two existing fare categories, making apples-to-apples fare comparisons difficult. While some agents saw this as an obstacle to profitability and a move toward direct sales, others thought it would help their business.
As is often the case when we report on Carnival, readers were vociferous in their reactions, posting strongly worded comments such as this one: “I only sell Carnival if I'm FORCED to and will never offer them to potential cruise clients during an initial consultation. I've had it up to my eyeballs with them for some time now.”
4.Agents Unhappy With United in Wake of Res Cutover UAL Chief Apologizes for Customer ‘Disservice’ and Can This Airline Be Saved?
Troubles affecting two of the nation’s top airlines figured in three of our most-read stories this year.
After United’s transition to Continental’s SHARES passengers services system last April, agents reported exceedingly long call hold times and a plethora of other issues. The head of United Airlines apologized for “customer disservice," but agents were not mollified by the apology.
Another story that piqued reader interest looked at a string of negative events surrounding American Airlines, everything from loose seats to excessive flight delays. It analyzed what the implications are for an airline once known for its innovation and reliability.
5. Traveler Risks Are Not What You Think
Think that terrorist incidents are the biggest risk that business travelers face in international destinations? Not even close, according to a travel safety and security expert, who says car accidents and gastrointestinal illnesses are fair bigger threats. In an interview with Travel Market Report, she gives useful advice on how travel managers can make a significant difference in reducing the problems that global travelers face.
6. Agents Applaud Stricter Anti-Rebating Cruise Policies
The growing trend among cruise lines to institute or expand anti-rebating policies is widely welcomed by travel sellers, this story reported. Loosely defined, rebating involves giving a client a discount by paying back some of a travel agent's commission – either as an upfront discount or after the cruise. Agents have vocally called for more restrictions by more lines and there are signs the message is getting through.
7. Affluent Travelers: It’s the Experience That Matters
It should come as no surprise that many travel sellers are interested in strengthening their foothold in the lucrative luxury market. The good news for these agents, according to luxury expert Pam Danziger, is that a growing number of affluent consumers are more interested in acquiring experiences than possession.
Danziger advised agents to understand the mindset of those clients willing to invest in personal growth – and create experiences for them. “The key is to look at ways you can help your client look at the world in a new and different way,” she said. “We want to come back from our trip with a new perspective on who we are.”
8. DOT Expected to Enforce New Ad Rules Aggressively
When strict new rules from the Department of Transportation on baggage fee disclosure, airfare advertising and post-purchase price increases went into effect last January, industry attorneys warned that travel agencies could face hefty fines fo noncompliance. They urged agents to review the new rules and consult their attorneys on what they mean. Travel Market Report interviewed two leading attorneys about the rules and their ramifications and also presented guidelines on what agents should know.
In August, the dire warnings came true when DOT imposed a $180,000 fine against Travelocity for violating the rule requiring that full airfares, including taxes and fuel surcharges, be disclosed in any advertising. Attorney Al Anolik urged small travel agencies as well as large ones to take note. It could happen to them as well, he said.
(See also: An Agent-Friendly Guide to New DOT Disclosure Rules and DOT Gets Tough on Airfare Ad Rule.)
9. Are Storefront Agencies Making a Comeback?
While the trend for travel agents to close their brick and mortar agencies and work from home has been a huge industry trend for over a decade, there appears to be a small uptick in agents doing just the opposite. More affordable commercial real restates in some regions may be making the storefront option more attractive to agents.
At the same time, industry observers say that agents who are opening storefronts tend to be those who have worked out of storefronts in the past. But in contrast to their earlier, more traditional agencies, these new storefronts are more boutique in nature. While not everyone agrees on why or to what extent this is happening, the consensus is that anything that makes travel agents more visible to consumers is a good thing.
10. Home-Based Agents Still Face Roadblocks in Supplier Relations
Despite the fast growth of their sector, many home-based agents still find themselves invisible to suppliers, some of whom are still working on a territorial sales model designed to serve brick and mortar agencies.
For their part, suppliers are especially challenged to identify and cultivate relationships with those home-based agents who work through host agencies, as it’s the host not the individual agent that most suppliers identify as their contact. The good news is that some suppliers are devising solutions to the problem.