Tour Ops See Agents Enduring as Top Sales Channel

Travel agencies continue to drive the majority of tour operators’ bookings, according to a new USTOA survey. Tour operators say the finding is a strong endorsement of the value of travel agents, particularly for sales of complex tour products.

The survey of USTOA active members found that agents represented nearly two-thirds (64%) of total packages sold in 2011. That number is expected to hold steady in 2012.

The survey, a first for USTOA, was conducted by PriceWaterhouseCoopers and released at USTOA’s annual Conference & Marketplace on the Big Island of Hawaii last week.

Complex product
“Traditionally the tour operator community has had much higher bookings from agents than any other channel,” said Richard Launder, president of Travel Corporation USA. The company has 20 brands including Insight Vacations, Trafalgar and Brendan Vacations.

“But it depends on the type of product and the consumer being appealed to,” he said, noting that tours are often complex products involving international air, different types of accommodations, travel insurance and other elements.

“It seems to me that a Caribbean cruise, for instance, has to some degree become a commodity; it’s a simple enough product for people to understand,” Launder said. “If consumers feel confident to book a cruise online they will. If they feel confident enough to book an African safari online they will, but I don’t see that happening anytime soon.”

Dan Sullivan IV, director of sales for Collette Vacations, said he believes there has been a leveling off in booking vacation travel online.

“The world has become so complex that there are a lot of people who just want to deal with an expert, and I don’t think that will change,” he said. “The marketplace is becoming more diverse and there’s a growing need for agents in terms of leisure travel, touring and FITs.”

Cruise vs. tour
Cruises are often a simpler proposition for consumers versus tours, Sullivan added. “We have a cruise program in Australia and we use one ship, versus our Australia land program where we could be dealing with 10 different hotels and several flights throughout the country. There are just a lot more moving parts for a tour package.”

The tour industry is also more fragmented than the cruise industry, Sullivan noted. “There are three to five major [cruise] players, and they are all household names.” By contrast, the tour operator industry has multiple players, many of which have little name recognition among consumers.

No NCFs on tours
Cruise line policies may also be driving agents to sell more tour products. Sullivan noted the large number of non-commissionables on cruise sales, versus “few, if any, non-commissionables with tours.”

A recent PhoCusWright study found that agencies accounted for 62% of cruise passenger revenue in 2011, down from 66% the year before. It also predicted a further decline in agents’ share of cruise sales — to 57% — by 2014. (See Study Sees Agents ‘Stagnating’ as Cruise Distribution Channel, Nov. 26, 2012.)

Agents, in fact, are focusing “more time and energy on selling land-based tours with the advent of cruise non-commissionables,” said Steve Gorga, president and CEO of Travel Impressions. He said land-based tours offer agents greater revenue potential.

OTA growth levels off
“It’s also about the value of a travel agent,” Gorga said. “People are becoming more aware of the knowledge agents possess.

“The huge growth of the OTAs has certainly leveled off,” he added. “And agents often offer a better deal than is available online.”

Terry Dale, USTOA president and CEO, said he sees agents’ role in tour operator sales staying strong. “I don’t believe we’ll see further erosion in the use of travel agents,” Dale said.

The USTOA study was the first of its kind, and the group plans to repeat the study every two years. “With this study we can then start seeing trends over a decade. I think this number [for agent bookings] will remain stable and hopefully grow,” Dale said.

Not all tour firms alike
Agents are not the primary sales channel for all of USTOA’s diverse members.

“Twenty-five percent of our members said agents book virtually 100% of their business while, at the other end of the spectrum, we have members — primarily those that do students and academic business — who don’t get agent bookings,” Dale said.

“Our policy is to encourage all of our members to work with agents, although we recognize there are some who don’t,” Dale added.

Three-quarters of USTOA’s active members, representing 120 different brands, participated in the survey.

Potential markets for agents
Travel Corporation’s Launder said it’s a mistake for agents to ignore the student and youth market. He pointed to Contiki, one of his company’s brands, which caters to 18 to 35-year-olds.

These clients have grown up with the Internet and are comfortable booking travel on it, Launder said. “These kids have no reference to travel agents, and whereas once upon a time there were a good number of agents who focused on this market, now agents don’t.”

Agents will miss out on this group as they grow up and become potential clients, he added.