Asia is complex, travel agents will continue to rule

The complexities and challenges of the Asian market will mean that traditional travel agencies will continue to dominate the travel distribution channel in the region for years to come.

Speaking at the Abacus International Conference in Kota Kinabalu, Sabah, last week, Don Birch, president and CEO (pictured) shared the GDS’ forecasts for travel distribution trends in Asia from 2007 to five to 10 years out.

Birch said that traditional travel agencies would move from their 80% share now to 60%. Online travel agencies would shift from 10% to 25% while airline direct would go from 10% to 15%.

In the US, the trends are slightly different, he said. Airline direct (online) has gone from almost nothing to 20%, while airline direct (offline) has dropped from 40% to 25%. Online travel agencies now represent 20-25% share while traditional travel agencies have dropped from 50% to 30%.

Saying Asia is different, he noted, “Asia’s differences mean that indirect distribution still counts provided travel agencies change”.

An Abacus survey of 1,533 travel agencies in 12 countries conducted in September 2006 highlighted four main concerns facing travel agencies. The highest percentage (35%) feared “price war”, 26% cited low cost airlines and direct bookings by suppliers, 24% singled out growing revenues while 12% were focused on reducing operating costs.

“It is good to note than more than a good percentage are looking to move to higher value niches,” said Birch.

Agents, he said, must become “agents of the customer”. He ticked off the list of things a travel agency had to be or provide – customer advocate, time saver, expert guide and advice, personalized service and niche player in high value services.

Above all, he cited trust. “Travel is an emotional buy, websites are not emotional.”

“Differentiate or die. It is not enough to sell commodities such as tickets for Disneyland Hong Kong. You must do three things well – build strong brands, develop multi-channel competence and have unique products.”

Commenting on Abacus forecasts on distribution trends, Roland Jegge, vice president-Asia for WORLDHOTELS, said that in the hotel area, online sales were growing faster than through the traditional travel agency channel.

“We are at 20-25% now and it will grow further,” he said.

However he noted that with the entire travel market projected to grow in Asia by seven to 10% a year, there would be plenty to go round for everyone, travel agents included.

Birch, who will leave the GDS at the end of this year after leading it for the past several years, also gave two agents ¬– Kesari Tours, India and Misa Travel, Singapore – the “Presidents Award”.

The award is his own choice of agents “most likely to influence others in the industry” based on criteria such as investing in people, adopting new ideas, customer service, business efficiency and energy.