Small isn’t just beautiful, it can be profitable too

Diane Bouzebiba, managing director for Amadeus UK and Ireland, explains why she believes it pays to be niche.

These are challenging times for the travel industry, with retailers battling to hold onto their share of tightened consumer wallets. So, where does this leave the smaller, niche agencies? Perhaps surprisingly, they are in a comparatively strong position and I’ve listened to a number of niche agents who tell me they’re succeeding in areas where their larger counterparts have failed to make an impression. So why is this?

Consumers who book via a niche agency are often looking for a tailored, specialist trip. Customers of specialist agencies tend to be more affluent than those who only look to mainstream brands. This bodes well for specialist agencies, as they can bank on customer loyalty even during a recession.

With many consumers still being ‘time poor,’ travel has become increasingly about ‘bucket lists’ and personal enrichment. So even though activity lessons, equipment, and one-to-one local guides can all add up, customers will typically expect to pay more for quality and service. Higher prices can also lead to higher commission and service fees for the niche travel retailer.

Specialist agencies will often sell a more personalised service. They can afford to invest more time with each client, knowing that they are forging valuable long-term relationships, which they actively nurture. They are in a strong position to offer expert advice and guidance, and their customers appreciate being saved hours of internet trawling to research holiday providers they have never heard of operating in distant and unfamiliar territories. In fact, a recent ABTA survey suggests that a huge 19% of independent travellers spend seven hours or more researching destinations ahead of a holiday, with further hours spent looking at cost for travel and accommodation.

Having the ability to specialise in a particular destination or sector ultimately helps to instill confidence in customers. Travel suppliers also stand to gain from a steady stream of customers via the specialist retailer and will often ‘court’ niche agencies, by identifying specific perks which can then be passed on to their discerning customers.

So how will niche travel retailers evolve going forward? We could see some looking to create a new customer segment specialism, moving towards designing and offering ‘life experiences’ for customers, rather than focussing on holidays within particular regions, or specific activities. We also anticipate them leveraging social media more to inspire customers and grow their business with like-minded travellers.

Technology will play a large part in enabling niche agencies to have access to the specific content they require, to service their customer through the channel they require – multi-channel technology is vital – experience-led search either via website or in agency, traveller care through mobile technology, and customer data management to enable anticipation of client needs will be the fundamental building blocks of future success. Surrounding the customer with targeted care and information will make all the difference.

It is clear that smaller, niche agencies are able to capitalise in ways their larger counterparts sometimes cannot. It remains to be seen how the travel industry as a whole weathers the current recession, but certainly in terms of business size, it seems big is not always better.