Key Challenge for Aussie Agents: Charging for Knowledge

The conventional wisdom says Generation Y and younger travelers are a lost cause. They grew up with computers, they buy online, they compare notes online – they basically live online.

And that’s precisely why the Australian Federation of Travel Agents is advertising to those younger travelers. Because they grew up buying travel online, they know better than most that OTA sales lack the one thing travelers need most: service.

Service is exactly why last year was one of the best ever for Australia’s travel agents.

“2010 was one of the most successful years for travel agents because there were so many dramas — volcanoes, airport closures, political unrest, and what have you,” said AFTA chief executive Jayson Westbury in Sydney, Australia.

“The media here were ferocious over the poor consumer getting the short end of things. Reporters were saying that people who had used a travel agent were far better off in terms of being managed through the crises than people who did it themselves. That’s what brought us to this campaign.”

What are the challenges facing travel agents in Australia?
Westbury: The challenge is being able to charge for your knowledge. In any business where you charge the consumer a fee outside the product, they challenge it. Doctors, maybe not so much, because you can always say, ‘Yeah, I got better, so it was worth it.’ Travel pricing here is so ferocious that agents often have to spend time convincing the consumer the additional fee is worth it.

And what are the opportunities?
Westbury: That’s where this campaign starts. We are talking about the value of using a travel agent, talking down the mythology about direct booking being cheaper. We’ve got a popular line, ‘Cheap when you look but not so cheap when you book’ that resonates in Australia.

People have all seen that great fare online and decided to come back tomorrow to buy and when you come back it’s gone. Online haven’t got the technology to create an itinerary build that is more than direct point-to-point. The fare build that goes with a consumer format is almost all view-book. A travel agent can give you view-hold. They can hold fares so consumers can think about it for a night or two and work out the kinks before they buy.

How does that work?
Westbury: Part of what makes that work is all-inclusive pricing. Under our Trade Practices Act, if you advertise a price, it has to be the real, all-inclusive price. No hidden taxes or airport charges or security fees.

If a fare is $60, the airline can charge you an extra $10 for an exit row seat and for $15, you can check a bag, but those are genuine value-adds. If you buy the $60 fare, you can fly that sector for $60. You’ll have to carry your bag on, you’d be squished in the back row, you wouldn’t get a meal, but you’ll fly.

Where does your Gen Y advertising campaign come in?
Westbury: A travel agent can put a product on hold. A travel agent can get you out of an airport that is closing down before an OTA even recognizes that there’s a problem. This campaign is designed to bring people who may not have ever used a travel agent and have seen the problems that can come from booking direct.

This idea that Gen Y book everything themselves online is more mythology. The reality is that they never really thought about using a travel agent. This prompts them to see the alternative. This isn’t battling some online Goliath, it’s a matter of articulating the value that travel agents bring and getting that message out to consumers.

What can U.S. agents learn from Australian business practices?
Westbury: What we have in Australia is franchising. Very few agencies trade under their own name because they have seen the advantages of being part of a brand.

Travel here has become a brand-based trade because consumers recognize brands and respond to brands. They become brand loyal. They go to Harvey World Travel or Flight Centre, American Express just like they go to Macy’s.

We’ve got about 3,000 retail travel shops in Australia, a very strong retail footprint. Most of these are small, under $3 million in turnover, owned by a husband and wife or a couple of partners, with three or four consultants.

What is the advantage of the franchising approach?
Westbury: Franchising gives these small businesses incredible purchasing power. It allows them to provide incredible pricing to the consumer, but it also gives them a very commercial way to be rewarded through overrides. And it gives them someone else to negotiate the product side so they can concentrate on the selling side.
   
In the States, selling travel is more personal. The downside is what happens when you want to retire? Nobody else can be Fred’s travel. When you are behind a brand, it is easier to exit the business. Clients are coming to you the brand, not you the individual. That’s a subtle but important difference between the American and the Australian markets.