In Cruise Sales, Travel Agents Are the Undisputed Champs
by Marilee CrockerWhen it comes to booking their cruise vacations, consumers still love travel agents best. And the romance shows no signs of fading anytime soon.
But when it comes to all their other leisure travel needs, growing numbers of U.S. consumers are turning their backs on traditional agents in favor of online booking channels.
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This well-established trend shows no sign of abating, according to Lorraine Sileo, vice president of research for PhoCusWright. “The majority of Americans are going online to book travel,” Sileo told Travel Market Report last week.
Those are among key findings in PhoCusWright’s Consumer Travel Report Third Edition, which is due out in early June. The report is based on surveys about the booking behaviors of consumers who had stayed at paid lodgings and/or taken a flight for leisure travel in the previous 12 months.
Traditional travel agents continue to be consumers’ preferred channel for booking cruises – by far, Sileo said. “Agents totally dominate cruise,” Sileo said. But overall in the U.S., “the leisure travel agent continues to decline in terms of usage for travel planning and travel booking.”
“There’s a continuing shift from offline to online,” and online travel bookings are growing faster than the market as a whole, according to Sileo.
Cruise trend unexpected
Agents’ hold on the cruise market remains firm. In 2010, agents booked 72% of cruise passenger revenue, not including shore excursions and ancillaries, according to PhoCusWright.
Agents’ continued authority and sales dominance in the cruise sector surprised researchers, Sileo said. “We thought that cruise, like air, like hotels, like dynamic packaging, would move online, and that has not happened.”
Some slippage
Agents’ dominance in cruise bookings is slipping slightly. But the slippage in agent share of leisure bookings is nowhere near as dramatic in cruise as in other sectors, or in leisure travel overall. The travel agent share of the cruise market is down from 79% in 2006, and it is projected to fall to 70% in 2012.
Online cruise bookings are a small share of the cruise market and likely will remain so. Just 9% of all cruise passenger revenue was booked online in 2010. “That’s been pretty steady,” Sileo said. PhoCusWright projects that the online share of cruise bookings will only go up one point, to 10%, in 2012.
“Travel agents really have cruise locked in,” Sileo said.
Online bookings grow
Despite the good news in the cruise segment, the overriding trend among consumers is growing use of online channels for leisure travel bookings, a pattern that does not favor traditional agents.
“There’s still share shift going on,” and that will continue, especially as younger people start traveling. “People making their first travel purchases are going to do that online,” she said. “There’s really a generation of travelers [for whom] this is the only way they know.”
Also, as people shop more online, they book more online.
“It’s hard for traditional agents,” Sileo said. “People aren’t going to call and bother a travel agent shopping on the phone. So many people like to shop and book using the same channel.”
Booking exclusively online
Of particular note in the findings, Sileo said, is the share of leisure travelers who now book their travel exclusively online. Last year, 30% of Americans booked all their travel online, according to PhoCusWright. That’s up from 26% in 2008. The percentage of travelers who said they “usually” booked online grew from 21% to 24%.
Put those numbers together, and you’ve got 54% of Americans who are booking their leisure travel online either all of the time or most of the time, according to the PhoCusWright research.
In terms of offline bookings, a slim 10% of leisure travelers are making all their travel purchases offline, including both with traditional agents and by phone direct with suppliers. That number has remained steady for three years. All told, 16% said they book “only” offline or “usually” offline, Sileo said.
Evolution of online
The pace of growth in online bookings has slowed. “It’s not as dramatic,” Sileo said. At the same time, she added, “It’s not like it’s reversing.”
Sileo attributed the slowing in part to the recent economy. “The market itself is slowed a bit. That’s impacted both online and offline.”
Another factor is that consumers continue to book more complex travel through travel agents. “There are certain things that people will always do offline,” she said. “Certainly higher-end luxury travel, complex travel, international, and of course corporate – those are the sweet spots for the traditional travel agency market.”
Even with growing consumer interest, especially among baby boomers, in more complex and experiential travel that does not lend itself to online bookings, Sileo said she sees no growth of agency usage in the U.S. online leisure space.
“The majority of trips still are a hotel room and booking an air flight, and the majority of Americans are saying, ‘I want to do that online. It’s easier.’”
At the same time, agents are still a force in travel, especially when you consider both business and leisure, Sileo said.
“They still play such a big role in the travel distribution landscape, when you look at their influence on the market. Even when you look at online and mobile and social, they’re still viable, Sileo said.
Next time: Going overseas. Travel Market Report looks at trends in usage of traditional travel agents and online channels in global markets.
