Travel agents are slowly losing ground to online booking sites, but they still hold the confidence of travellers and should use that trust to their advantage as they reinvent themselves for the Web, says a distributor of travel technology services.
“The Internet has and will continue to change the way the business is conducted and we believe the distinction between what is offline and what is online ultimately will blur,” said Ellen Keszler, senior vice-president of travel agency solutions for Fort Worth-Tex.-based Sabre, speaking during a teleconference earlier this week.
Travel agencies have historically been slow to implement new technologies said Lorraine Sileo research analyst with PhoCusWright in Sherman, Conn., and now that they are financially strapped, may be hesitating to make any large IT investments when many are laying off staff. The reality is they may not be able to afford to wait much longer.
According to a PhoCusWright study from September, 31 cents of every dollar spent online is a travel-related purchase.
Today 63 per cent of all bookings are made with traditional agencies, but it is expected that number will decline slightly to 61 per cent by 2004. It doesn’t sound like much of a shift, but Sabre, which has offices in Toronto, is trying to convince travel agencies to act now rather than lose out over the long-term.
PhoCusWright also indicates that 80 per cent of online travellers feel local agencies provide reliable personal service, but 60 per cent say they can get something close to it from online players. To compete with that, agents will have to take their business online, said Keszler. But right now 59 per cent of American Society of Travel Agents agencies have a Web site and less than one third have booking capabilities.
The biggest decline in agency business is expected to come in the area of airline booking. Currently 56 per cent of all airline travel bookings are made by traditional brick and mortar agencies but it is expected the number will decline to 41 per cent by 2004.
Consumer online air bookings will grow to 13 per cent from seven per cent by 2004 with corporate online bookings increasing to seven per cent from less than one per cent now.
“The travel economy is really just about to take off — travellers are just at the point of adopting travel with the Internet,” said Jeff Harmon, senior vice-president of Sabre’s online travel solutions.
Harmon says a lot of the pure online travel agencies are also moving into a more traditional role as the profile of the customer using online service will require more personalized service. And the industry is following that trend. For example, Travelocity recently purchased Air Tickets Direct in the U.K., giving them a call centre operation they had been lacking, said Harmon.
It is also expected that travel suppliers will be more successful in taking their own reservation systems online.
“The traditional offline-only channels – the brick and mortar offices and reservations offices — will see significant booking declines over the next few years as the online channels continue to make gains,” said Keszler. “All of these channels are evolving and we believe our customers’ ability to thrive in the future depends on making sure that they migrate their own business.”
To meet that need, Keszler says Sabre has developed products to help customers reinvent their business by adding an online channel for customers to use — whether they want to book right away or shop and then book offline.
Sileo said Sabre is also looking to keep agencies strong as they represent the company’s bread and butter.
“It is a call to action to travel agencies because travel agencies still represent a huge percentage of their total business. Sabre owns (70 per cent interest) Travelocity and all these other B2B businesses and the travel agencies still represent most of their revenue. So the the health of the company really depends on the health of the travel agency,” said Sileo.
Some of the current drivers in the travel distribution marketplace include travellers’ desire to have more control over the booking process and the progress of technology to better enable the process.
“Technology has been a huge driver in what’s been happening in the travel distribution marketplace – lower cost, higher bandwidth is a significant impact in facilitating the Web,” said Keszler. ‘New technologies such as XML and wireless devices are also significant trends.”
Travel suppliers such as airlines are also working hard to regain control of their customers by investing in their Web sites and one-to-one marketing tools.
Many agencies cite expense, a fear of technology and concerns over customers checking out competitor sites when asked why they haven’t taken their business online, said Keszler.
Harmon said the Sabre.Res suite of products allows traditional agencies to establish their own storefront with three levels of investment for travel agents, ranging from US$50 a month for small agents to US$100,000 licence fee for medium to large travel resellers requiring more customization and integration.