Mid-sized travel agencies continue to shrink in number, while the number of agencies with sales of less than $1 million or more than $10 million continue to grow, according to a new ASTA survey.
In 2011, the number of agencies with sales of less than $1 million grew by 93% (over 2002 numbers) while those with sales of more than $10 million grew by 100% (over 2002 numbers).
The number of agencies in the $1 million to $10 million range decreased anywhere from 21% to 56%.
Profitable agencies inch up
There is good news for agencies of all sizes, however. The number of travel agencies that made a profit in 2011 finally surpassed 2007 levels, albeit by a small percentage – 55% in 2011 vs. 53% in 2007.
“As the economy makes solid gains, we are seeing both large and small agencies experience revenue growth,” ASTA CEO Tony Gonchar said, adding he expects to see mid-sized agencies begin to do better when the economy grows “in earnest.”
Employee hires outpace ICs
Perhaps a sign of the improving economy, the average number of full-time employees (12) has begun to rise since 2009.
Alternatively, this may be a sign that the crackdown on the use of independent contractors (ICs) by the IRS and state governments is having an effect. (See story “Govt. Turns Up the Heat on IC Compliance," March 12, 2012)
Also since 2009, the average number of ICs (8) and part-time employees (2) has gone down.
Retail location versus home-based
Retail locations with multiple employees still make up the largest percentage of agencies (35%), although this figure is down slightly from the previous year (37%). But in comparing 2003 with 2012, the percentage of home-based agencies grew by 409%.
Changes in sales mix
Hotels, cruises and tours continue to dominate the sales mix for agencies.
Hotels, which accounted for 11% of an average agency’s mix in 2011, saw an increase in percentage share of 32% since last year.
Cruises, accounting for 26% of sales in 2011, saw a percentage share increase of 18%; the percentage share for tours, which accounted for 31% of an agency’s mix last year, grew by 11%.
Also, the percentage of international travel sales has increased over the last seven years, up from 40% in 2004 to 56% today.
Conversely, between 2002 and 2012, the percentage share of air sales dropped by 29%, while car rentals saw an 18% decrease in percentage share.
Online communications grow
While the telephone continues to be an important communication tool, online communications between travel sellers and clients are taking off.
Although half (52%) of business communication with clients is still conducted by phone, that percentage is down by 30% since 2003. On the other hand, 33% of communications were carried out online in 2011, up by 246% since 2003.
A fifth (19%) of business is still done face-to-face, with the numbers of walk-ins/face-to-face appointments staying relatively the same over the past several years.