The travel industry has returned with a vengeance. As we've been reporting for months, travel advisors are busier than ever with many having told us they've had their best January or February or first quarter ever. But with talk of revenge travel starting to slow down and fears of an economic recession staying elevated, travel advisors are wondering, when does the surge slow down? Is a plateau coming, and what will that mean for business?
It's a question we raised with several consortia, host agency, and franchise executives during a recent six-month check-in. All believe the travel surge will slow down, though the timeline remains unclear, and that advisors must be prepared for what might eventually be our new "normal."
New "Normal" Coming
There's little doubt that the surge in spending on travel will eventually slow down. What that looks like – and when it might happen – is yet to be determined, however.
"That's the big question mark," said Jackie Friedman, president of Nexion Travel Group. "Will the demand continue to be as high as it is right now? We don't know for sure."
"It will plateau in some regard," said Debbie Fiorino, COO of World Travel Holdings, the parent company of Dream Vacations. "Bu we don't see it happening really soon."
Michelle Fee, CEO and founder of Cruise Planners agreed. "Honestly, I thought we were going to get to a point in 2023 where it was going to equalize… However, 2024 is turning out to be an even more amazing year."
While it seems clear people will eventually use up the money they've been sitting on for three years, Fee believes the drop off may be less dramatic than some expect, particularly for advisors with clients that have moved to work-from-home or even hybrid work/office situations.
"There's a lot of savings from the 2019 grind. How much gas did you put in your car in 2019? Your work clothes that you no longer have to buy, the lunches that you went out to with your fellow workers, the tolls. It's such a huge savings that now people have more disposable income. I believe that people are going to continue to use that money to buy experiences."
But just because business continues to be good with, as several executives said, no immediate end in sight, does not mean advisors should not be preparing.
"It's about not exhaling too much and thinking business is going to be great forever," said Alex Sharpe, president and CEO of Signature Travel Network. "We're going to have to generate demand. We're going to have to make sure we're doing repeats and referrals and being on social and showing people what's out there. We're going to have to continue to be relevant."
Maintaining Demand & Revenue
Whether or not people are saving enough money on an annual basis – versus using money they've been saving for the past few years – most executives told TMR they believe the market will stabilize. Not only in terms of the number of bookings but also in terms of pricing. And if pricing goes down, so will commissions and annual revenues.
"I think it's going to stabilize and agencies are going to have to work harder to bring transactions up to keep the revenues that they have today," Friedman said.
Jeff Anderson, co-CEO of Avoya Travel agreed.
"A headwind could be finding new clients to keep the booking levels at current pacing…" he said, adding that the continuously increasing capacity for many products, particularly cruise, will also require a need for more new clients.
To do that, both Friedman and Anderson said, agency owners and independent contractors need to step back, look at their businesses as a whole, and start planning for a plateau.
"Businesses will need to look at their new vs. repeat ratios and create marketing strategies and partnerships that will aid agencies in finding new customers in the specialties that they sell," Anderson said.
"It will normalize and they have to figure out what their business looks like in a normalized environment," Friedman added.
While Virtuoso's executive vice president David Kolner isn't particularly worried about a plateau, he does recommend advisors take a moment to look at their business from the outside.
"One thing we've been advising advisors to do for a decade or more is to rank their clients based on return. Actually rank your top 20 clients, who they are, and who are you really spending the most time with. Maybe your bottom 50% of clients are some of the most time-consuming clients that you have."
Now, when advisors are busy, is a great time to consider opening up space for new clients by getting rid of those that are at the bottom of that list.
"I think the only complacency might be is if advisors are not more rigorous with accepting new clients that they might really enjoy working with and might be really profitable, instead of staying with a current set of clients that might not be the best for you or for them," Kolner said.
Sharpe told TMR it's not just a possible plateau that advisors need to be thinking about.
"We're not filling every ship. We're not getting our disproportionate share over direct even, in cruising or in other areas," he said.
"The majority of travel is still booked through OTAs and DIY, so there is an unlimited market opportunity for most travel advisors," echoed Kolner.
The result is the same either way.
"We have to generate demand," Sharpe said.
Don't Stop Marketing
A key piece of advice executives TMR spoke to had for travel advisors was to stay present in their clients' lives. Just like during the pandemic, when there was no business, advisors need to stay connected to clients when business is booming.
"Don't assume that the demand is always going to be there," Friedman said.
"We try to do our job and tell them not to get complacent," said Fiornio. "To stay in front of them [clients]."
"Some people have backed off marketing… and I don't want them to get to a point where they're thinking, business is just going to happen without it," Sharpe said. "We've got to make sure that flow of thoughtful marketing and really engaging marketing picks up at the right time for each advisor."
Both Fiorino and Fee said the easiest way to stay in front of clients is to opt into and use the tools your host agency, franchise parent, or consortia offers.
"Whether its tools that we use for social media, for email distribution, for direct mail programs…" said Fiorino.
"We [Cruise Planners] never stop marketing. We are not complacent and we are making sure that for our advisors, their name and information is in front of their consumers at all times," added Fee.
Nexion's Friedman told TMR it's about more than simply staying in front of clients. It's about creating lifelong relationships.
"One of the things we tell them is to look at a client as a client for life," she said. "Sit down with them, the way a financial advisor would, and come up with a multi-year plan. Then continue to stimulate their interest and desire to go to those places."
For instance, if a client has Australia on their bucket list and there's a new museum in Sydney opening in a year, send them a link to a newspaper article about the museum.
"Really look at developing long-term plans. Do not fall victim to indifference. You have to nurture your relationships with your customers and not look at these things as a transaction," Friedman added. "Don't assume they're going to stay loyal, because if someone else is out there hustling and reaching out to them, you could lose them."