Int’l Travel Displaces Domestic as Driver of Agency Sales

International sales have grown dramatically as a portion of travel agency business since 2004. They now account for 60% of all agency sales, according to the newly released 2013 ASTA Agency Profile.

The ratio of international to domestic sales has done a complete flip since 2004. In that year, ASTA agencies reported that domestic sales accounted for 60% of sales, while international sales were at 40%. The figures are based on feedback from a representative sample of ASTA agency owners and managers.

Complex travel favors agents
Why such a dramatic shift? While consumers find it increasingly easy to book a simple domestic trip on the Internet, the more complex demands of international travel require travel agents’ guidance, said Melissa Teates, ASTA’s director of research.

“For international trips, whether they are leisure or corporate, an agent is seen as a more valuable resource,” she said. “There’s a bigger investment in time and money. People realize that if there are flight cancellations overseas, which happened during the volcanic eruptions, it’s really helpful to have an agent.

“Similarly, if you can’t speak the local language or you didn’t get the room you wanted for your honeymoon, you want an advocate to straighten things out.”

The trend for experiential travel, which is often international, is also having a strong impact for agencies, Teates added. “People want advice from someone who knows the country firsthand,” she said.

“When it comes to international and experiential travel, this is where the agent really shines.”

Changes in sales mix
Another key trend in agency sales has been an ongoing shift in the mix of products – with tours, cruises and hotels accounting for a steadily growing share. At the same time, airline and car rental sales have been on a continual decline.

Tours and packages, which accounted for 31% of agency sales in 2012, grew by 11% since 2002, while cruises, which accounted for 26% of agency sales in 2012, grew by 18% during that same period.

Hotel sales showed the most growth of all – accounting for 11% of agency sales in 2012, an increase of 32%.

Air sales tank
Conversely, airline sales, which accounted for 24% of agency business in 2012, declined by 29% since 2002. In 2002, air sales comprised more than one-third (34%) of agency business – ranking ahead of both tours (27%) and cruises (22%).

A notable exception in the declining air sales trend is among agencies that do at least 70% of their business in corporate sales – for these agencies, air sales still comprise a large share of business – 60%.

Car rentals decline
Car rental, just 4% of agency sales last year, have declined by 18% since 2002.

While car rental companies, unlike airlines, still pay agent commissions, agents are finding that the nature of car rental makes it difficult to pursue, Teates said.

“What agents are telling us is that they just don’t see car rental as much of a revenue source,” she said. “People will often reserve a car and then change their mind, so the agent won’t get the commission. Because car rental doesn’t require a deposit, as hotels do, there tend to be more no-shows.”

While hotel sales posted the most growth, they remain a relatively small portion of agency business, increasing from 8% to 11% between 2004 and 2012. “It’s really the declines in airline and car rental that gave hotels a bigger share,” Teates said.