Canada Agency Outlook: Sticky Issues Amid Bright Signs

As Canada’s travel agency executives look to the year ahead, they are upbeat about the direction the industry is moving.

They see healthy suppliers, strong niche markets and consumers who are beginning to appreciate agents more as they discover the value that agents deliver.

What’s worrying Canada’s agency execs at the outset of 2014? Continuing agency consolidation, uncertain economics and an aging workforce, plus one overriding challenge  – ensuring that agents are well compensated for their services.

POSITIVE SIGNS

Suppliers on solid ground
“I see wholesalers continuing to gain strength, and this is good for the industry as a whole. All the major airlines and tour operators seem to be on sound financial grounds and growing their businesses.” – Gary Gaudry, president, Maritime Travel

Key segments are on the rise . . .
“The biggest trends in retail for 2014 will be based around groups, multigenerational and others, FIT and luxury travel. All signs are pointing to upward trends in these areas, as these are travel products where advisor value really shines.” – Tim Morgan, vice president, Travel Professionals International

. . . as is experiential travel
“Experience-based travel continues to fuel the business. This trend will only grow as travelers realize the full potential of the travel experiences that are available in today’s world.” – Michael Merrithew, chairman and CEO, Merit Travel Group

Appreciation for agents . . .
“I believe the value of using a travel agency will continue to rise in the eyes of the consumer. The recent rash of winter storms had a positive effect on consumers understanding the value of using an agency.” – Gary Gaudry, Maritime Travel
 
. . . and for real value
“Our clients continue to seek out value in their vacation planning, which is not to be confused with seeking cheap options. We’re seeing a consistent flow of consumers who are happy to pay for high-end experiential travel, as long as they are clearly shown the value the trip delivers – both in experience and in price – including, but not limited to, amenities, upgrades, inclusions big and small, private transfers.” – Michael Merrithew, Merit Travel Group

TRIALS AHEAD

Supplier squeeze, consumer education
“The main challenges for 2014 will be travel providers continuing to put the squeeze on distribution channels, and distribution channels having to educate the consumer on advisors’ very important value proposition, which is a real benefit that needs to be compensated for properly by the consumer.” – Tim Morgan, Travel Professionals International

Making a living
“We constantly grapple with the underlying economics of the retail business. As traditional walk-in traffic evolves and migrates to phone, email and web, we need to take a hard look at our rental costs. We also need to ensure that we are adequately compensated for our services. That means working with preferred suppliers who respect us as partners and having the confidence to charge reasonable service fees where appropriate.” – Joseph Adamo, general manager, Transat Distribution Canada

Rising prices
“With the Canadian dollar losing ground to the U.S. dollar, expect to see prices increase for vacation travel and a slight increase on the airline side as well.” – Gary Gaudry, Maritime Travel

Contending with consolidation
“Consolidation will continue, with fewer and fewer larger agency groups. The exciting part about consolidation is how agencies are developing unique positions in the market, focusing on specific market segments, destinations and types of travel. This industry restructuring will ultimately give consumers the ability to deal with agencies that are clearly leaders in unique products or services, with higher standards of product/destination knowledge and service delivery.” – Michael Merrithew, Merit Travel Group

Embracing multichannel
“As travel retailers, we need to embrace a multichannel reality. That means being accessible 24/7 on the web for both shopping and booking. The web is becoming an extension of our points of sale, just as the telephone and simple email are already well-established touch points that complement our physical locations. In 2014, I expect even more online activity that is tied to our physical points of sale.” – Joseph Adamo, Transat Distribution Canada

Staffing for the future
“It can be challenging to find and hire the right travel professionals for your agency. In addition to the challenge of finding qualified individuals, the Canadian industry is going to see a large share of its workforce retire in the short to medium term. We all need to be focused on succession planning to deliver seamless transitions for the business and for our clients.” – Michael Merrithew, Merit Travel Group