What kind of hand will travel agencies be dealt in 2012? The uncertain economy and the presidential election are the two biggest wild cards in the deck.
That was the consensus of travel agency group leaders when asked by Travel Market Report to name the biggest challenges and opportunities for agencies in the year ahead.
Rising airfares and fewer flight frequencies also figure prominently among upcoming challenges for travel sellers, they said. Gas prices are another key variable that will impact travel in 2012.
Among key opportunities for travel agencies is the potential for recruiting new talent, both from the ranks of recent college graduates and from the legions of job seekers looking for new careers.
On the product side, river cruises and group travel both hold plenty of potential for boosting agency revenue this year, according to industry leaders.
Challenge: The Economy – and the Election
“You have to put the economy at the top (of challenges), unfortunately. You also have to put the election on the list, because election years are always challenging years for businesses. There’s a lot of uncertainty, and sometimes people don’t act on buying decisions when there’s uncertainty, and obviously a vacation is a buying decision. The good news is we’ve been able to weather the storm since 2008 as an industry, and I expect we will do the same in 2012.” – Dwain Wall, senior vice president and general manager, CruiseOne/Cruises Inc.
“I see the biggest challenge to be consumer confidence, which is something that cuts across all industries, whether you’re a jeweler or a travel agent. Next year is an election year, so there will be a lot of noise and distraction that could impact consumer spending. Agents are used to dealing with competition from things like Groupon, etc. What’s harder to deal with is the fear factor.” – Michelle Morgan, president and CEO, Signature Travel Network
Opportunity: Sell Travel as a Break From the Noise
“Maybe because of the election next year, people will get tired of hearing all the election campaigning that goes on. There’s an opportunity to get in front of people and say, ‘Hey, get out of town for a few days and you won’t have to listen to the noise anymore.’” – John Werner, president and COO, MAST Vacation Partners
Opportunity: Travel Choices Vary With Economy
“We know that people will travel regardless of the economy. The variables will be how much they spend and what the travel will look like. Multigenerational travel increases when the economy gets worse – people want time with family. When it’s better, couples want to get away.” – Lindsay Pearlman, co-president, Ensemble Travel Group
Challenge: Higher Airfares, Fewer Flights
“Airfares are going to be higher (and) airlines intend to again reduce flight schedules, which means fewer flights to choose from and they’ll remain crowded. And higher airfares can definitely hurt sales on the non-airline side of the business. It makes it more difficult to get people to the ships and to the resorts.” – John Werner
“Adequate airlift to key destinations will be the primary concern, coupled with air rates that won’t keep travelers grounded.” – Bill Sutherland, vice president-travel services, AAA, Inc.
“Airfares will continue to be a key challenge, especially to Europe as we move into Wave season.” – John Lovell, president, Vacation.com
Opportunity: Spread the Word
“We have to continue to be out there in front of the consumers with promotions. If you’re not promotionally driven, I think you’re going to suffer. It’s still very much a consumer-driven marketplace, and consumers are very keen on value. What we’re finding is that we can definitely make the phones ring and we can definitely create demand when we’ve got consumer promotions out there.” – Dwain Wall
“We need to make sure that we continue to market ourselves and to share the value of cruising, whether it’s luxury or mass market. People want to get to back to their lives. I think we’re even hardened to the stock market – one day it’s up 400 points, one day it’s down 500 points. I don’t think people look anymore. So the opportunity is that people want to travel, and we just need to continue to get that word out.” – Michelle Fee, CEO, Cruise Planners/American Express
Challenge: Keep Bookings Locked In
“Obviously some consumers are concerned with the economy. They are watching their discretionary income. At the same time, we’re hearing from agents that these fears are not being reflected in 2012 bookings. One of the big challenges will be in keeping those bookings locked in; in keeping clients engaged – and making sure they don’t cancel. The challenge will be to retain business already on the books.” – Jackie Friedman, president, Nexion
Opportunity: Recruiting New Talent
“The key opportunity will be the recruitment and development of new talent for a new consumer. We do have an opportunity in this economy to have people consider travel advising as a career. We’re looking for college graduates who are traveled, have good interpersonal skills, are adroit with social media and technology and can speak to a new generation of consumers in the way that they wished to be addressed.” – Kristi Jones, president, Virtuoso
“The need for new blood coming into the industry continues to be a challenge. A lot of consumers are moving back toward agencies, which is nice, but I think it is going to be a challenge if they don’t have qualified salespeople on staff. There is a lot of unemployment, so there are a lot of opportunities to find good talent that might not have thought of this industry. – Nicole Mazza, chief marketing officer, TRAVELSAVERS
Challenge: Competing With Costco on Cruise
“One (challenge) is the continued consolidation and commoditization of cruise products. If you now have luxury products that are available at Costco, that’s a challenge for advisors who have counted on close and long-term relationships with cruise lines.” – Kristi Jones
Opportunity: Work With Preferred Suppliers
“Agencies really need to work with those key preferred suppliers that are supporting them. Be supportive of them, have strong marketing programs with them. If they’re part of a group, they should be utilizing their preferred suppliers, where they get their maximum ability to earn through marketing and coop and through preferred commission levels. The more they give to a supplier, the more supportive that supplier is going to be to them.” – Nicole Mazza
Opportunity: Encourage Early Bookings
“Agents have a huge opportunity in educating consumers about the importance of booking vacations early. The windows have tightened up during the past two years. There are great opportunities for pricing, but consumers will not be able to get good airfares if they don’t jump on them. We need to re-educate consumers on the importance of booking early and locking in good airfares.” – Jackie Friedman
Challenge: Prices at the Pump
“Gas rules the world. When gas is high, people hold tighter to their pocketbooks. So when I’m watching the news and it says gas prices went down four cents, I stand up and clap. We’re not talking the wealthy, we’re talking mass (market); there are only so many discretionary dollars.” – Michelle Fee
Opportunity: Go for Groups
“We did a survey of our members who told us there is huge opportunity in the group market. All kinds of groups, but especially weddings and other types of celebrations. There is a lot of this type of business on the books for next year.” – Michelle Morgan
Opportunity: River Cruises Booming
“Interest in river cruise product is at an all-time high. Also, advance bookings for the European cruise market are very strong.” – John Lovell
Challenge: Getting Paid Quickly
“Every single business in this economy is cash-flow challenged. How long does it take you to get paid? If you can, figure out a way to charge a service fee upfront. The problem is that most service fees are very small in comparison to the commission, so you’re really only chipping away at the surface of the issue. The issue really is how quickly you can get paid your commission.” – Brad Anderson, co-president, Avoya Travel/American Express
Opportunity: For Specialists, a Bright Future
“The savviness of the current marketplace – where you can take an iPhone, shoot a picture of the barcode and find out exactly what that product is priced at in some other store – really has raised the bar once again for professionalism. If you are a professional and specialize and don’t try to be everything to everybody, you’re going to do very well in 2012.” – Brad Anderson