The Travel Agent Industry’s Biggest Winners and Losers for 2015
TravelPulse file photo
It’s official, or rather it appears to be since no hard and fast stats are available. But the buzz—and the anecdotal evidence—is that travel agents are back.
After many long, challenging years—including the end to airline commissions, the tragedy of 9/11 and its devastating effect on travel, the recession of late 2007 to 2009 and the rise of the OTAs—agents have bounced back.
The professional, the savvy and the aggressive among them have survived, grown strong in 2015 and look to grow even stronger in the year ahead.
Consider the personal stories of individual agents you’ll meet at the annual conferences of consortia, franchise groups and host agencies. They’re energized and engaged. They share their success stories, their specialties and their marketing strategies. They’re upbeat about their future—and despite global unrest and terrorism—they’re also optimistic about the future.
Also, consider some of the sales reported by agency groups.
The Signature Travel Network reached $7 billion in sales this year, a new milestone for the group while Virtuoso’s sales in 2015 totaled $15.5 billion. Travel Leaders Franchise Group reports annual sales by its members of a whopping $20 billion in 2014. And Ensemble, whose members own shares in the organization, says 2014 was a record year for profit-sharing payouts to members based on their sale of preferred suppliers. It expects that 2015 will be on a par with that year.
Home-Based Agents/Independent Contractors
The home-based/independent contractor sector of the agent community continues to gather steam.
The home-based agent population increased from 31,000 in 2006 to 40,000 in 2011, and in 2010 home-based agents were responsible for nearly $10 billion in travel sales, more than one third of all agency leisure sales, according to The Once and Future Agent: Phocuswright’s Travel Agency Distribution Landscape 2009 – 2013.
Another indicator of the strength of this sector: The National Association of Career Travel Agents (NACTA), has grown to 52 chapters in North America adding eight new chapters in 2015 including a Canadian Chapter in Eastern Ontario.
According to a 2015 ASTA survey conducted for NACTA, 87 percent of NACTA’s 1,800 members work from home (4 percent work both from home and in an office, 1 percent work in a storefront location and 7 percent work at business park or high-rise office location). In the same survey, 60 percent of the respondents saw increased business in the first half of 2015.
“We continue to thrive and we will see continued growth in this sector,” said Ann Chamberlin, president of NACTA . “[The home-based/independent contractor] continues to be the fastest growing segment in the industry. Don't underestimate the power of this group for new business, especially group potential given their influence on their clients.”
The numerous host agencies, the growth in their membership and their business expertise are another testament to the success of home-based agents and independent contractors. Nexion, for one, celebrated its 20th anniversary this year and added more than 500 U.S. agents and more than 90 Canadian agents to its total of 3,800 agents in North America.
Following some tough years, ASTA is back on track. Many in the industry believed the association, whose roots date back to 1931, had lost its way—and its relevance to travel agents.
That’s changing. After years of flagging attendance, the ASTA Global Convention in Washington D.C. this year attracted nearly 1,000 agents and suppliers. Its 2016 convention will be held in Reno Tahoe next September and organizers hope to top 2015’s attendance.
Top executives of the nation’s three largest airlines were part of the program at the Washington D.C. gathering, the first time that has happened since the start of the commission cuts. Their presence was a positive sign for both ASTA and agents. The message they delivered, though one many agents couldn’t quite believe, was their support of agents.
“Shame on us for being absent so long,” said Bob Somers, vice president of global sales at Delta Air Lines, said. But, “The importance of the travel agent was never lost on us. You have our commitment to have your back and provide you with the service you need.”
ASTA is also gaining the support of the major consortia.
The MAST Travel Network in 2014 became the first consortium to pay a portion of its members annual ASTA membership dues. It has since renewed its agreement to subsidize dues.
Following MAST, Virtuoso began this year to subsidize its members ASTA dues while the Signature Travel Network and Travel Leaders Franchise Group have made ASTA membership mandatory for their members.
Legislative assaults on travel agents have continued as financially strapped state governments attempt to impose new taxes and regulations on travel agencies as a way to raise revenues.
And in another trend, state governments are trying to impose local and state lodging taxes on hotel “intermediaries,” a category they say includes travel agencies.
Due to ASTA’s efforts—and its success in enlisting grass roots support from agents—the states have lost at many of these attempts.
In another victory for ASTA—and agents—this year, the Washington state legislature will not eradicate a special tax rate of 0.275 percent that involves travel agents’ commission income.
If the proposal to repeal the tax provision had been approved, it would have cost Washington travel agencies and tour operators more than $14 million over a two-year time frame alone, according to ASTA.
This year saw another victory: the decision by Maryland Governor Larry Hogan’s veto a hotel bill that would have applied a 6 percent tax on agents’ service fees.
Suppliers Who Go Direct
Travel agents have grown accustomed to suppliers’ efforts to encourage direct bookings by consumers. Every year, we see some of these attempts and 2015 was no different.
Marriott International this year debuted three YouTube videos as part of a new direct booking campaign. ASTA and agents found one of the ads particularly objectionable.
“Scenic Route” featured comedian Grace Helbig stepping in to help a lost couple find their destination although a gas station attendant was advising them to take the scenic route. The agent community believed the attendant was meant to be viewed as a travel agent.
Following protests by ASTA, Marriott caved and withdrew the ad.(The other two ads remain on YouTube.)
Disney Cruise Line weighed in with another development to undermine agents: it capped agent commissions for onboard bookings at 10 percent.
That move drew a strong reaction from luxury travel network Virtuoso which dropped Disney as a preferred supplier its 14-year relationship with the line.
A highly respected and visible group, Virtuoso has a large international network of more than 9,800 travel advisors in North and South America, the Caribbean, Europe and Asia Pacific. They booked $15.5 billion a year in travel in 2015.
The horror of terrorist attacks around the globe has yet to affect Americans’ travel intentions to any great degree.
Indeed, most of the country’s traveling public is defiant in the face of terrorism and regards their plans to go ahead with travel or book new travel as a strong retort to those whose goal is to disrupt our lives and challenge our values.
Following the recent terrorist attacks in Paris, travel agents reported that a few clients canceled their travel, some postponed their trips but most forged ahead with their travel plans, stating their determination not to be ruled by terror.
Another indicator comes from the Travel Leaders Group’s just released 2016 Travel Trends Survey in which it asked its members whether the events in France caused their clients to cancel or delay their travel to the country. Travel Leaders is the largest travel agency franchisor in North America.
The answers: the greatest percentages said their clients were proceeding with their immediate plans and continuing with their future/long-term plans for travel to France.
And when it came to their own travel, the agents said they wouldn’t hesitate to travel to Paris given the opportunity.
“An overwhelming majority of our agents indicated they’d travel to Paris given the opportunity – an endorsement not only for the famed city, but also for not allowing fear to dictate our lives,” said Ninan Chacko, Travel Leaders Group CEO.
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