This is the third in an ongoing series about issues surrounding independent contractors.
The closure of thousands of brick and mortar agencies over the past two decades fueled a phenomenon that reshaped the retail travel industry – the independent agent. Now the independent sector is evolving in significant ways, both in its makeup and business strategies.
The number of independent travel agents continues to grow. But today’s new independents are not nearly as likely to come from a traditional agency background. Instead, these newcomers are more apt to be entirely new to travel.
And while independents operating as one-person businesses still prevail, the independent segment encompasses a growing number of new business models.
A new independent streak
The change in the profiles of individuals who are starting up as independents today is significant, suggested Jackie Friedman, president of Nexion, a host agency in Irving, Texas.
“Clearly, there are a lot of new people coming into the business, but what is changing is where they are coming from. Initially we saw people coming from brick and mortar agencies, but as that segment has shrunk, we are seeing less of this.”
Improved technology and the relatively simplicity and low cost of setting up a home-based business is drawing many newcomers to the independent travel fold, according to Friedman.
“It’s attracting a lot of people who want to switch careers and work part-time in it,” she said.
“We’re also seeing people looking at travel as a retirement career. They are ready to leave the workforce, but don’t want to be fully retired. They love to travel and want to do more travel – they see this as a good bridge into retirement.”
In particular, new independents are coming from service or people-oriented fields, such as teaching or real estate, said Andi McClure Mysza, president of MTravel, the host agency for Montrose Travel in Monrovia, Calif.
However, she still sees a lot of independents coming from traditional travel backgrounds.
“Agencies are closing, merging, consolidating – leaving more people out of a job,” she said. “Some (new independents) are trained former employees who know how to set up a travel business, while others are former agency owners who don’t want the headache of running their own business.”
Diversity is a strength
The evolving nature of today’s independent segment is a positive trend for the industry, said Melissa Teates, CAE, director of research for ASTA.
“The real strength of this segment is the diversity – from part-timers who set up travel for social contacts, to the brick and mortar agency owner who is downsizing into partial retirement, to the new agent starting out and planning to build an agency.”
Because of this diversity, independents “can reach many segments of consumers,” she said.
Business acumen required
Some new independents, especially those new to travel, find that setting up shop as an independent agent requires business skills they may not have anticipated.
“Travel is a sexy business, so it attracts a lot of new blood and, as a result, you get a lot of fallout,” said McClure Mysza.
Friedman added that newcomers “may think they are in this for the long-haul, but then reality sinks in. They need to invest in their business, to have a solid plan. Booking travel is not fun and games.”
A virtual environment
Those independents who do have business acumen are diversifying their sales approach and flourishing in an environment where location is increasingly irrelevant, said Ann van Leeuwen, vice president of the National Association of Career Travel Agents (NACTA).
For consumers, “the question now isn’t, ‘Where can I find an agency to book travel?’ but, ‘Where can I find a good travel professional?’ And that doesn’t necessarily mean they need to be inside an agency,” she said.
While attending a recent trade show, van Leeuwen talked with several independent agents who said they had no need of a storefront. “They have an established client base, and their clients don’t feel the need to ‘stop by the office.’”
Employees of their own
The ability to work in a virtual office environment, where consulting is done over the phone, by email or over coffee, is also benefitting the growing number of independents who have employees of their own, a trend cited in a recent ASTA-NACTA study. (See story, “Indie Agents Shift Away From Cruise as Biz Model Evolves,” March 5, 2012)
“We are seeing a growing number of travel professionals working virtually with their employees,” van Leeuwen said.
Whether or not they work with their own subcontractors or with partners or solo, independent agents are growing in sophistication, according to Friedman. “These [independents] are growing more and more professional.”
Independents also enjoy certain advantages over agents working in a traditional agency environment, Friedman noted. “They have the flexibility to go where their customers need them to be – they’re not stuck at a desk from nine-to-five.”
But there are challenges. For instance, not having a storefront means that independents have to be more proactive, Friedman noted.
“Independents have to really get out and network to grow their business. They have to look at new ways to market and develop their contact list.”
Not having a storefront can also make developing relationships with suppliers a challenge for independents, said van Leeuwen, noting than many district managers still limit sales calls to brick and mortar locations.
“Suppliers inadvertently overlook independent travel professionals since many can’t track their sales information in their reservation systems. Their revenue may be booked through another agency they are affiliated with or the host agency. So this makes sourcing the sale or rewarding and recognizing the travel seller difficult,” she explained.
Moving away from cruise
Another change in the independent sector is that fewer independents are calling themselves cruise specialists, a key finding in the recent ASTA-NACTA study. This is a development that Friedman believes is a natural result of independents’ growing experience.
“Selling cruises is a good thing for new people because it’s a one-step process and there is a lot of training available,” she said. “As they get more experienced, some gravitate to land packages and some get away from cruises entirely.”
Another factor, van Leeuwen noted, is that independents, like travel sellers in general, see cruise revenue shrinking. Increasingly, they “understand the need to diversify their portfolio of travel products and package land travel that ‘wraps’ around cruises.”
While some diversity is beneficial for independents, Friedman does not recommend becoming a generalist.
“We encourage agents to have deep expertise on a few things, so they can streamline and target their marketing and sales efforts,” she said.