Changing face of travel

Where to for the traditional travel agent in this ever changing world? As travellers are bombarded with many and varied options to not only book their travel but obtain the information they once relied on the High street shop for, what is the future for the traditional outlet?

Last weeks announcement from Jetstar on the possibility of Post Offices becoming ticket sellers only serves to highlight the growing nervousness amongst agents who have not moved to embrace change. Let’s look at some recent developments both here and overseas.

In the UK, there has been a rash of street front closures in the last couple of months all blamed on the increasing numbers of internet bookings.

Thomson Holidays managing director Peter Rothwell said: “The UK travel landscape has completely transformed in recent years. Today’s Brits are self-made travel agents who take great pleasure in putting together their holidays.”

In Australia, we had the disappointing results posted by one time pin-up of the industry Flight Centre, which reported a 21% drop in first quarter pre tax profits and a subsequent savaging of its share price as it struggled to change its business model to reflect the changing landscape.

A Citigroup report at the time said bluntly that Flight Centre’s travails “reinforces our view that the traditional agency business remains in structural decline”.

“The rising popularity of low-cost airlines, non-commissionable surcharge increases, online distribution growth and the group’s slowness in developing its own online productivity tools have hampered its recent trading performance,” a Citigroup research report said.

“We continue to believe the transition required from essentially being a retailer to a technology distribution company will not be easy, as structural change in the industry is only going to increase . . . The increasing use of internet distribution by airlines is the key challenge facing Flight Centre, in our view.”

Chairman Graham Turner was quoted as saying “”It is obviously very early days in 2005/06 but initial results are disappointing,” he said.

“Travel,” Mr Turner said, “you would hardly say it’s booming.”

Contrast this with the success of on-line hotel seller wotif.com, which expects a 35 per cent jump in revenue to more than $250 million this year. The company plans a public float in the first half of next year and some analysts believe it could be worth up to $500 million.

Nearly 100,000 bookings are made every month through Wotif.com, which declared earnings before interest and tax last year of $19.6 million. That’s up from just $2.2 million in 2002.

In the US, JupiterResearch reports that the U.S. online travel market has experienced strong growth over the past year and forecasts that the market will reach $68 billion by the end of 2005, up from $57 billion last year, and grow to $104 billion in 2010. Supplier Web sites continue to represent the majority of online travel sales, capturing 56% of online travel revenue in 2005

A recent report from Amadeus contends that the self-service option will become as prevalent in the travel industry as the use of ATMs in the banking sector. Self-service options are becoming an accepted and integrated part of normal working life, no more remarkable than executives using a PC to write an e-mail rather than dictating a note to their assistants to type up.

Add to this the moves by online giants Yahoo and Google to move into the travel space by enabling travelers to assemble almost live-time travel catalogues using digital cameras and mobile phones.  Travel planners could then access other people’s experiences and tips, a ready made on-line travel guide.

Where to from here? What can the street front agent do to combat this seemingly never ending attack on their domain?

Fee for service? Specialised tours for niche interest groups? Large franchise marketing budgets? Or is all just media hype and people still want face to face service?

Tell us your thoughts.

The Mole

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