Future of Travel Agents?

Article Published in Travel Weekly, July 29, 1996

With the evolution of electronic ticketing, self-booking over the Internet, and the emerging trend of point-to-point airline services that can only be booked via telephone (including some that do not pay agency commissions), the question arises ...

What is the Future of the Travel Agent?

The future for travel agencies is very positive ... just not in the "mode" of today's operations. Today, agencies are largely "order takers" and "ticket distributors" ... even the majority of the leisure stores provide little more than these services. Agent's "skills" are in the ability to access inventory -- and to issue a document (tickets in the case of air; voucher or itinerary in the case of tours, cruises, hotels, etc.).

In today's travel world, agents are the "link" between the human consumer and the inventory systems that distribute the "product" manufactured by travel vendors. Airlines dominate the agent distribution system mainly because the airlines were the first to provide a fully automated distribution system, and more importantly, airlines provided an automated settlement process long before credit cards. Other travel vendors have simply "piggy-backed" on the existing systems.

The evolution of automation and technology being applied in the travel industry is rapidly assuming the very high "labor-driven" costs of providing "interface" to the inventory (and in the case of airlines, settlement) systems. Effectively, technology is decreasing or eliminating the need for "inventory access" and "ticket delivery". The "role" of today's agent is being replaced.

However, the need for travel information is increasing with the explosion in distributed information and related expectations. The need for marketing "packages" that integrate travel information with destination (really, fulfilling consumer "dreams") is concurrently increasing as information becomes more readily available and the "ease" of booking at lower prevailing costs further enables fulfilled consumer "expectations".

With "expectations", comes the need to "consolidate" travel or build offerings that enable "flexible" travel opportunities. This type of travel product into some form of "mini-packages" that meet broad specific demographic, niche, or business market demands ... but retain some flexibility in length of stay or other related destination needs. With "mini-packages", the need to distribute related information and access will increase.

None of these are services easily performed or provided by the manufacturing "vendors" of travel product, even in today's automated world. It is logical, therefore, to expect agents (and agencies) to assume these information and marketing services ... and to take "risk" in providing "mini-packages" to the demographic, niche, or business markets.

This would suggest that many agencies will shift their "selling" efforts to higher yield commissioned distribution of tour and cruise packaged products -- and to service fees for becoming pure information providers or providing "unpackaged" booking services for simple destination travel. It would also suggest that other agencies, particularly those with a large corporate base, will begin to negotiate "risk positions" with travel vendors for the virtually guaranteed destination travel of their known customer or client base (i.e., these agencies will buy the seats, rooms, and car rentals at discounted prices in advance and offer them in "mini-packages" -- thus reducing the vendor's risk and allowing the vendors to stabilize pricing).

As certain agents consolidate air today, the theme presented above would suggest that agencies which serve specific destinations or demographics (ski, mountain, sea, desert, old, young, married, single, etc.) will also "mini-package" travel solutions focused to serve these target markets.

The "mini-packages", along with the today's conventional tour and cruise "package" -- will still need to be inventoried and distributed. Some agencies that are automation literate, will evolve these automation skills and play an increasing role in "decentralized" inventory "warehousing" of "mini-packaged" products (and in providing links to the varied and many distribution channels that are evolving).

For the next five to seven years, the GDS/CRSs will continue to provide the core travel distribution access. It can be reasonably expected that as the distribution channels expand, so too will the consumer base of travelers (as they have expanded to meet the increased air availability for lower priced point-to-point travel. However, with the shift to direct booking of simple travel, the GDS/CRSs will focus increasingly on distributing the sophisticated packaged and "mini-packaged" products -- and in providing "switching" access of the "mini-packages" and other non-air related travel product.

The GDS/CRSs will certainly continue to offer air ... because the "information providers" will need that resource to "package" their fee compensated itineraries. But the lowering of commission revenue combined with the increasing cost of labor at the GDS/CRS's traditional "point of sale) will force a shift in the compensation revenue streams. The GDS/CRSs will "fight a balanced" shift in responding to the increased distribution alternatives such as direct vendor access, Internet, telephone, interactive television, etc. -- and in a separate arena, with the banking system for the settlement of travel purchases.

Still, with the "bullets flying overhead", the need for "agents" will not go away. What will change is the role that an "agent" plays in the distribution of travel product changes. For the agents and agencies that recognize and adapt early to these shifts -- there are major profit opportunities. For those seeking the "traditional" security of commissioned sales, they only need to shift their focus from airlines to the "packaged products" of tours, cruises, and in the immediate future, "mini-packaged" target market offerings. For travel agents (or consultants, if you prefer the term), the future looks bright!