U.S. Travel Agency Outlook 2006-2009 - New PhoCusWright Study
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.
We began our recent report on ‘Family Travel Rising’ with the following:
“All the evidence -- whether you are looking at the Amex-Harrison Group study we reviewed in our last issue, or the Ipsos Mendelsohn Affluence Report completed in September, -- shows Family First when it comes to disposable dollars.
We believe family focus is going to be front of mind for a long time to come, long after the punishing economic climate has subsided. Provider brands will be hard pressed to provide much more than kiddie or junior, or young adult activities. Smart travel agents will have to rise to higher levels of creativity and performance on the family front to sustain customer loyalty and earn the benefits of word of mouth in the neighborhood.”
And last week we caught our favorite global traveler-editor-writer-commentator during a quiet moment at home in England, the home of The Gostelow Report. She shared these thoughts:
• The hotel industry has been very slow to realize that this big expansion in family travel was going to happen. We’ve had “connecting rooms and you can put the kids next door”. They moved on to two swimming pools rather than one. One was kid friendly and one was not. But we really haven’t had anything more than that.
• We are seeing more and more bigger family groups. Operators are having a real challenge coping with such groups because it’s not a group per se, but they form their own groups. They want to be private. They want their own thing. .They tend to do their own excursions. They suddenly want a bus to take them all out. So it’s a real, real challenge. And so far the hotel industry has not realized this is happening. Now, it’s not only families. We’re also seeing more and more groups of friends traveling. And the hotel industry is not incentivizing enough – say a pair of DINKs come- Double-Income-No-Kids. There’s no incentive to them at the moment to bring along two other friends or even four other friends. And there’s big potential on the marketing side there.
Everybody knows her, but her bio is worth repeating.
Mary Gostelow, president of Gostelow Travel: Hottest Hospitality News Worldwide, is an inveterate traveler on the road more than 300 days a year. She owns and publishes the definitive Gostelow Reports, monthly market intelligence briefings to the top levels of the hospitality industry. She is the editor of KIWI's online Wow! Magazine, and also sends out a monthly update to top travel professionals worldwide.
At the same time, she is contributing editor to such publications as Elite Traveler, enRoute, Hotels and Le Magazine.
But Lux 360 Found a Brighter -and we think, Sensible Side-
From Harvey Chipkin’s report in the British online Hotel Report-a paid service from William Reed Business Media- http://www.wr-bi.co.uk/ - Reproduced here with publisher permission
At the first industry wide meeting following the fall financial meltdown and the recent presidential election, the consensus seemed to be that, yes, the industry faces a historically challenging situation that will last for awhile. But there was also a feeling that lodging is in a better position than other industries – and, happily, a few silver linings were perceived as well.
We’ve all heard the bad news over and over: global liquidity drought, drops in rate and occupancy, a dismal outlook for employment, and a possibly extended recession. But some leaders managed to find ways to take – if not a positive view -- at least a more nuanced one. Following are a few comments about why weeping and gnashing may not be the only appropriate attitudes.
Steve Joyce, who recently became CEO of Choice Hotels International, said he has been “the only optimistic person in the room at a number of events over the last few weeks.” I strongly believe,” said Joyce, “that there is a paralysis factor and that you can’t base projections on two weeks of hysteria.”
“Forecasts in this environment,” he continued, “are entertaining but not much use.”
Other ‘smart marketer’ insights from Joyce, Mark Lomanno of Smith Travel Research; Peter Yesawich, CEO of The Y Partnership; Michael Kaufman, Chairman of National Restaurant Association; Patrick Ford, CEO of Lodging Econometrics; and Roger Thomas, Steve Wynn’s design guru for many years.
Nat Ives, in Ad Age Online Sept 6, cites new data from Ipsos MMR which assures that well-off readers read print publications just as much now as they did 5 years ago.
Also, survey respondents making more than $100,000 annually said their average hours online had grown to 22.1 each week from 10.7, while the time they said they spent watching TV sunk to 18.6 hours from 23.7 in the 2003 survey. Read the full Ives story at http://adage.com/mediaworks/article?article_id=130685. Lux 360 attended the client briefing this week and will provide additional perspective in our Sept. 30 issue, interviewing Ipsos MMR President Bob Shullman.
Issues & Insights 
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.
