Agency Outlook: Execs Say Pent-Up Demand Bodes Well for 2013
by Maria Lenhart and Andrew SheivachmanWhile concerned about the global economy, agency group leaders see pent-up demand for travel making 2013 a robust year for travel agents.
Still, there will be challenges. In addition to the uncertain economy, agency group executives expressed concern about the lack of young talent in the travel agency profession, the impact of industry consolidation and competing against suppliers’ efforts to drive direct bookings.
On the brighter side, agency group executives also see opportunities in the growing interest in experiential travel and the boom in all-inclusive vacations.
Here’s what a cross-section of agency group leaders told Travel Market Report about business prospects for agents in the year ahead.
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Opportunity: Eager to Travel
“There’s so much pent-up demand out there, owing to the uncertainty there was this year because of the election. A lot of customers who were waiting to book travel have stopped waiting. Customers are realizing that if they wait too long, it’s hard to get the air component for a great last-minute deal. So the booking windows are lengthening. The opportunity is going after that pent-up demand, staying in touch with those customers and reminding them that the agent is here to book those trips.” – Jackie Friedman, president, Nexion
“All signs are that 2013 will be a better year than 2012. The advance business that’s on the books already for next year is up over this same time last year. It’s encouraging to see that amount of advanced bookings. People want to make vacation plans, so agents should capitalize on this. The winter season could be busier than it has been in past years, because customers want to book further in advance.” – John Werner, president and CEO, MAST Vacation Partners
Challenge: Economic Uncertainty
“People have to feel financially comfortable [to book], as travel is highly discretionary. A lot of people are worried about the economic outlook. For the ultra-wealthy, it makes no difference. But when you get to the upper middle class, it could put a squeeze on what they’re doing and thinking. Fortunately, we’re not really seeing this yet.” – Libbie Rice, co-president, Ensemble Travel Group
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“The economy is challenging, not just in travel, but what’s happening globally and how that will impact consumer confidence in the U.S. But all things considered, it’s going to be a very strong year for the industry. We’re seeing very good bookings activity, and pricing is holding up strongly. We are very encouraged by what we’re seeing based upon existing bookings.” – Dwain Wall, president and CEO, CruiseOne
Challenge: Recruiting Young Talent
The big challenge is [ensuring] that we continue to grow and continue to bring the right people into the industry to replace the aging population. We need to continue to find and bring young talent into the industry.” – Jackie Friedman, Nexion
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Challenge: Targeting Young Affluents
“How do we cut through all of the direct solicitation, reach the young affluent customers and convince them to allow us to show them the value we can provide? We need younger consultants, speaking to their contemporaries. We need to leverage the tools we provide our members. We need not only to participate in social media, but to embrace it – both to connect with those customers, but also to connect with the travel consultants of tomorrow.” – Alex Sharpe, chief operating officer, Signature Travel Network
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Opportunity: Review Your Suppliers
“People need to increase their bottom line. There’s opportunity to do this by reviewing the suppliers and the products you are working with. While you can’t control pricing, you can control what you sell and to whom you sell. It’s important to be able to place the client into the right cabin, and into a premium cruise when they are ready to move up from mass market. – Nicole Mazza, chief marketing officer, TRAVELSAVERS
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Opportunity: Analyze Your Costs
“Every agent has to look closely at maximizing every transaction and look at ways of lowering the costs of doing business. You can sell the same amount of travel next year, but earn more by analyzing your costs. Be more focused on preferred suppliers. Preferred suppliers are key – giving you the highest point-of-sale commission.” – Ken Gagliano, president, Travel Planners International
Challenge: Shrinking Profits
“Yield deterioration continues to be a big challenge for agencies. With so many non-commissionables out there, it’s essential to know how to offset this. This is why we train our agencies on the importance of upselling and service fees.” – Kathryn Mazza-Burney, executive vice president-sales, TRAVELSAVERS
Challenge: Suppliers Going Direct
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“There’s a growing challenge in suppliers going direct to consumers. You have to consider if you really want to send clients to a supplier who does this. You could be shooting yourself in the back, as your customer may not come back to you. Focus on those who have your back and support your system. The big challenge is to determine which suppliers are your best partners going forward.” – Ken Gagliano, Travel Planners International
Opportunity: Proving Your Value
“The key opportunity is to show – to prove – our value to the consumer, leveraging the tools we have, the multitude of suppliers. We need to bring together multiple products to create the right vacation experience for the consumer, while demonstrating that our expertise creates a great value proposition. Value can, and sometimes does, mean savings – but oftentimes the value is the access, the amenities and the seamless planning. In the wake of natural disasters and other disruptive world events, I believe our members have demonstrated even greater value.” – Alex Sharpe, Signature Travel Network
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Opportunity: Experiential Travel
“The trend for experiential travel continues to grow. People want a cultural experience, and that is why they are looking for a good travel advisor. It’s something that they can’t buy online.” – Becky Powell, senior vice president-global travel sales, Virtuoso
“From a destination standpoint, there’s a lot of interest in Southeast Asia and South America. We see a lot more customized FITs going on, maybe a little less tour-driven. People want something a little more unique, a little more sophisticated travel. Half of our members are in Canada where travelers tend to be more package-driven. But this is morphing into something different. Agents can take advantage of this by putting together something that clients can’t find on the web. Create a more personalized itinerary. This creates value for clients.” – Libbie Rice, co-president, Ensemble Travel Group
Challenge: Industry Consolidation
“With all the big announcements [of agency mergers] over the last few weeks, how does the small to mid-sized agency compete in this environment? There are still a lot of small boutique agencies, and we see value in their services. It’s important for us to continue to look at how we can support them. It’s important for clients to still have the small boutique agencies as an option.” – Becky Powell, Virtuoso
Opportunity; All-Inclusive Resorts
“A strong trend is the emergence of all-inclusive vacation resorts. There’s a building boom in the Caribbean and on the Yucatán peninsula. They are a really good opportunity for agents, because the average selling price is very attractive. There’s a wide range of product, from high-end luxury to more mainstream product. We’ve got something for everybody and, in many cases, there’s charter air with the tour operators.” – Dwain Wall, CruiseOne
Opportunity: Telling Agents’ Story
“The opportunity is in telling the great story of what a travel agent does and the services they provide. Too many people think we are order-takers. We all need to get together and brand what a good travel advisors does and market this to clients – and use it as an opportunity to attract new talent.”
– Becky Powell, Virtuoso
Challenge: Potential for Sticker Shock
“Pricing is somewhat of a challenge. If the demand is going up, the prices will stay stable and there won’t be as many sales. So there may be some customers who feel sticker shock.” – John Werner, MAST
Next time: How to succeed in 2013 – advice for agents from agency group executives.
