Study Examines Agents’ Role

Study Examines Agents’ Role

A landmark study on the U.S. travel industry marketplace shows traditional agencies selling nearly $110 billion in travel during 2006, which represents 41 percent of the total $266 billion travel marketplace ($140 billion — over half — counting the online travel agencies).

The study, released recently by PhoCusWright, indicates that agents have shifted their focus to meet changes in the market, causing the decline in agented market share to slow and approach stabilization. It also found that nearly half of all leisure and homebased agents are over 55 years of age, somewhat offset by the younger people brought in primarily through host agencies.

The Travel Agency Distribution Landscape: 2006-2007 was authored by analyst Douglas Quinby, with sponsorship from major travel organizations including the American Society of Travel Agents, Cruise Lines International Association, Airlines Reporting Corp. and a number of suppliers, many of whom have complained recently that it is difficult to find and identify the production levels of individual businesses. This study sheds quite a bit of light on the subject. Through nearly 1,900 survey responses and more than 60 in-depth sources among the agency community, suppliers and associations collected during the second half of 2007, Quinby has tracked and measured the extremely diverse models for agency business, how they have adapted to the changing marketplace — and how they haven’t.

The study cites the growth of the Internet as a major force in the travel market and a primary driver of change for agents. In 2007 agents booked 38 percent ($107 billion) of the total market, and the percentage is projected to decline to 33 percent by 2009, but the rate of the share drop has slowed and should stabilize soon. For 2009 PhoCusWright projects $104 billion in agented sales.

Quinby notes that the typical leisure agency has adapted by focusing on more complex travel products — cruise, vacation packages and FIT — rather than air, hotel and auto rentals. In addition, many smaller brick and mortar operations have turned to home based businesses, banding together under various plans to cut costs and earn higher commissions, while larger agencies have consolidated and merged. The study also found that for both groups agent fees are increasingly standard and that Global Distribution Systems are losing share as agents book online, but still represented 72 percent of agency sales in 2006. He said there are about 24,000 agency locations in the United States, 21 percent of which have no direct ARC accreditation. The total agent population numbered about 111,000 in 2006, ranging from huge global corporations to self-employed home-based entrepreneurs. The largest 65 agencies represent almost half of agented sales ($52 billion in 2006) and the largest agencies focused on corporate travel.

Homebased businesses represented 28 percent of the total agency population and just under $10 billion (about 9 percent) of total agency sales volume, with 90 percent falling in the leisure sector.

The estimated population of office-based agents in the United States is 80,000, with sales of $98,968, and the home-based population is estimated at 31,000.

The Western region is home to 23 percent of the agencies and 25 percent of the home-based agents. Only the Southeast had a much higher proportion of home-based agents. Among Western agencies, there seems to be a slightly lower incidence of booking escorted tours, while higher incidence of FIT bookings and packages. This may have less to do with agents and more to do with the regional presence of key tour operator brands and consumer travel preferences; cruising is strong, but not so strong as in the Southeast, which may reflect the difference in the amount of Western-based deployment. — Marilyn Green  

Warriors Visit the O.C.

From now to Oct. 12, clients can visit China’s famous Terra-cotta Warriors and related artifacts at the Bowers Museum in Orange County, Calif. The exhibit, sponsored by Viking River Cruises, was previously on display for seven months at the British Museum and will stop in Atlanta and Houston before ending up at the National Geographic Museum at Explorers Hall in Washington, D.C.

“It has been a thrill bringing travelers to China to see the Terra-cotta Army in Xian … We want to help give Americans a closer look at some of the treasures China offers,” said Torstein Hagen, founding chairman of Viking.

www.bowers.org
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