Last week we posted key highlights of PhoCusWright’s just released Travel Agency Distribution Landscape Report on our home page. Today, after a more in-depth review, we move on with selected insights and data that offer significant encouragement to all who have a stake in the upside of the agency channel.

(Please note that the Study does not cover the luxury travel market or luxury bookings. It does, however, provide a vital context for suppliers, agents, and  tourism authorities everywhere. I could not imagine any of us doubting  that the general health of the broader agency business has a big bearing on luxury distribution.)

• Traditional travel agencies ( excluding online travel agencies) accounted for almost $110 billion in gross travel sales in the U.S, or 40% of the $273 billion travel market in 2006. Travel agents’  total sales volume is expected to decline incrementally to $104 billion by 2009, when agents will account for 33% of all travel sales –with air being the major culprit. At the same time, the research suggests that the migration of online travelers away from traditional retail agencies has largely stopped, and may even have reversed itself, however slightly.  -PhoCus Wright Consumer Trends Report
• How many individual sellers of travel in the U.S.? See the chart below, while noting that the largest 65 mega-agencies account for a stunning 47% of all travel agency sales, which leaves another 23,000-plus agencies to carry the rest, resulting in a very fragmented mix of small, primarily leisure-focused agencies?
• “Facing significant upheaval in the industry, many in the agency community have responded strategically, tactically, and –most of all—aggressively to adapt, survive, and succeed” -Report editor Douglas Quinby
• While 72% of all agent sales are booked via GDSs, agents are increasingly booking more on the Web at the expense of the GDS.  Bookings by travel agents on a web site or electronic platform that does not involve one of the four major GDS companies will grow from 16% of all agency bookings in 2006 to 21% in 2009.

   Ron Kurtz, a principal with The American Affluence Research Center and a veteran of the luxury cruise industry, has some assertive things to say about all this measuring. He also shares the results of his latest survey of how the affluent plan to behave in the next year.

Who’s Affluent Anyway?

   “People have different agendas for why they push certain definitions of the affluent,” says Kurtz. “Some want to define on the basis of income, others on net worth and still others on investable assets.”

    Kurtz comes down squarely in the camp of net worth, believing “it’s a reflection of cumulative years of income and spending.” He notes that, “Income can be subject to substantial swings. We are now seeing the problems with defining affluence on the basis of income as some people on the fringes are really getting hurt; people with solid net worth are weathering the storm better.”

     “I believe that affluence is by definition a small segment of the population, asserts Kurtz; “I don’t believe in the concept of mass affluence and think that we should be selective. That’s why I chose the top 10 percent as being reasonably selective – and that is where you find the largest concentration of wealth. People earning $100,000 to $150,000 a year are not affluent.”

How the Downturn Is Affecting the Outlook of the Affluent on Travel

    Kurtz recently completed his  spring 2008 survey . As always, he asked 467 subjects what their outlook is for the next 12 months as far as business conditions, the stock market, their own household income. 

Indeed, people's levels of happiness increased with income.  Those with incomes of $250,000 or more, the ultra-affluents who correspond to the top 2 percent of households, averaged 27.63 points on the satisfaction scale, while those at the lowest income levels, the comfortably affluent consumers with incomes $100,000-$149,999, have a happiness rating of 25.1, also placing them in the high level of happiness.

The new luxury consumer is adopting a 'less is more' lifestyle
"The conspicuous consumption lifestyle as typified by 'he who dies with the most toys wins' thinking is giving way to a new appreciation for a simpler, less materialistic approach,"

"The aging of the Baby Boomers is also a factor in turning toward a less materialistic approach to the luxury lifestyle.  Americans today have an expected life span of roughly 80 years and once you reach 50 or 60 years of age, the question comes down to 'what do you want to do with your remaining 30 or 20 years?'  Increasingly, maturing affluents are not using their accumulated wealth to buy another diamond ring or mink coat.  Rather, they want to do something more meaningful with their money than spend it and do something more rewarding with their time than working 80-hours per week."

     Offer Nissenbaum recently moved from a position as regional vice president for Omni Hotels to become Managing Director of the Peninsula Beverly Hills succeeding Ali Kasikci who had run the hotel since 1992. Kasikci became renowned for creating southern California’s first Five Star Five Diamond hotel, but Nissenbaum intends to raise the bar even further with pre-set room temperatures, a scent for every guest and – “lots of bananas.”  In a chat with Luxury Travel 360, Nissenbaum took us on a quick tour of his ‘agenda in excellence’.  His Top 10:

• On brand image: “Peninsula ownership and top management always looks at long term brand recognition,” he said. “They do not cut expenses in down times, but continue to deliver great guest experiences. “
• On property upgrades:  “I just spent $4 million on a pool deck It was a great pool deck but we made it incredible with a three-meal restaurant, fire pit and heated limestone form Germany. And we installed flat screen TV’ in the pool cabanas.”
• On his management philosophy:  “I manage as if I own the hotel, like it’s my money. The key is to spend money in the right places. You have to have the mindset of an owner.”
• On his staff:  We have incredible talent already but my job is to continue to ‘cast’ the right people in the right job. We hire people for unique talents and put them in the right job."