The Survival of Travel Agencies
In “The Challenges Facing Travel Agencies”, we listed a number of trends and developments within the last 10 years affecting the environment in which small and medium sized travel agencies have to operate in. These developments have made it almost impossible to survive as a travel agency without re-thinking strategies and product portfolios. Here are our 15 recommendations for travel agencies on how to survive in this new and challenging environment.
These 15 tips are based on more than 10 years of combined experience of tourism research and working with practically all stakeholders in the tourism sector, and seeing how some travel agencies are thriving while others fall in the brave new world of transparency, sharing economies, DIY practices, and online market places accessible from anywhere with a WiFi network.
Travel Agency Survival – The Do’s and Dont’s
In the coming part, we will walk through all the points in the infographic. First, let’s start with the “Do’s”.
Provide Excellent Service and Competitive Prices
These are traditional “do’s” of any business, and may sound cliché. But now more than ever, it’s important for travel agencies to make the customer and his/her time and wallet feel valued. If you don’t make your customer feel special, someone else will.
Specialize and be a Niche Travel Expert
Perhaps the most import point. The small and medium sized travel agencies who have success are likely to have one thing in common: They cater to a niche market, their travel tours and services are unique, and they are experts in their field, so they can give you better advice and easier access to experiences than anyone else can. These agencies thrive because they do something that is difficult for the big online players and customers themselves to do. There is no end to what travel niche you can find. The niche can be based on demographics (age, gender, marital status, nationality, income, heritage etc.), occupations (architects, geologists, librarians, doctors etc.), interests (sports, history, wildlife, adventure etc.), special events (Olympics, festivals, religious celebrations etc.), and themes (luxury, wellness, honeymoons, camping, city breaks, family etc.).
Another big advantage you have by being a niche expert is that you save your customer several hours of internet research and countless worries of whether they booked the right product. The hours spent by customers searching for their holiday online is often forgotten in the hunt for the lowest rate. Now imagine if you save your customer 8 hours of internet surfing – to many customers that is worth a lot more than the small extra cost you add on.
To learn more about finding your travel niche as a travel agency, check out this great article “Find a Travel Niche: A Step-by-Step Guide” by Steph from Host Agency Reviews.
Show the People Behind the Company
Professional is not the same as anonymous. Let people know that there are kind and super talented persons helping them make their holiday dreams come true. Since more and more customers find you online, it is a good idea to add a chat function on your agency website. You can not only answer questions and give advice to potential web customers, you also give your agency personal character and can much easier develop trust between you and your customers. See these “6 Ways Your Business Can Benefit From Adding Live Chat Support For Website” by Maria Lebed.
Add Perks to Your Packages
If you sell simple packages consisting of transportation and accommodation, you may want to add a few extra treats for your customers. This can be a dinner, a tour experience or a nice welcome drink. If you know that your customer loves Dutch liquorice, you can even tailor a nice surprise for him or her. Extra perks serve multiple purposes: the experience you sell becomes more than a “shelf item” anyone can find; it is hard for your customers to directly compare the price from your competitors; you can entice customers by juicing up the itinerary with descriptions of the perks; and your customers will feel connected to your travel agency if you add a pleasant surprise during the trip. These “7 Ideas For Spoiling Your Customers With Extras & Surprises” by Sophia from Work Your Art, also apply for the travel industry.
Make Group Tours
Many travelers prefer to go on group tours. Group tours can lower the tour cost since some expenses are shared between the participants and group discounts often occur. Group tours allow customers to meet other participants who share similar interests, and for some customers the group tour style provides comfort and a sense of security. What makes group tours interesting for travel agencies, is that it is still difficult to arrange this kind of experience yourself, and it’s hard to find on the Booking.com’s and Agoda’s.
Consider Low Profit Margin on Certain Travel Products
Just like supermarkets are known to do, travel agencies may lose profits on certain products to attract customers to their shop. By having a handful of really good deals, a travel agency can create an image of being good value for money. The profit may be next to nothing in some instances, but you can extend your customer base and try to sell add-ons to the sold tourism experience. Next time customers want to travel, they will hopefully think of your travel agency. It can also be a good investment if you produce a lot of room nights (as we call it in the tourism industry) at specific hotels. If you can show a hotel you can sell their rooms, they will be more willing to give you good deals, upgrades, and better booking and cancellation conditions.
Be Creative in Product Offering and Branding
In an environment where potential customers are bombarded with advertisements off- and online with dream travels and bucket-list experiences, you need a lot of wit to attract their attention. Focus on the things you are good at, the things that you can help customers with, and localize and/or communitize your tailor-made marketing to specific rather than generic customer segments. You may not want to spend all of your marketing budget on an advertisement of 10 day Phuket package that includes flights and accommodation at Hilton. Then you will be competing on price with the big players. Instead, install quirky details into the travel itineraries. Things that make customers envision their holiday and convey that you are an expert.
Build Alliances with Suppliers
You depend on your suppliers, and they depend on you more than you think. Even though they are likely to get most of their business from the Online Travel Agents like hotels.com, agoda.com, and expedia.com, they are without exception happy to spread their sales to avoid over-dependency on a very limited number of buyers. Our best recommendation is to join travel fairs, trade shows, and visit suppliers on your own travels. As a travel agency, you are invited as a buyer, which often makes it cheap for you to meet a lot of central suppliers in person. With a personal connection you can create packages with the hotel or supplier on spot and agree on special promotions. If you choose a handful of suppliers that fit your requirements, you can build strong business relationships over time. It will make it easier for you to get free perks, and if your guests have issues on their trip, the personal connection with the supplier is priceless.
Use Your Personal Network
Travel agencies can thrive alone on good personal networks. They can be your best and most reliable provider of customers and personal ambassadors. For example, someone in your network might help you land the rights to arrange the annual company trip of their business department or make the tour package for the CEO’s wedding anniversary. If you have a personal network in the travel destinations you sell, use these to generate good ideas and create unique experiences for your customers. For example, if you arrange a group tour for German tourists, you can include a visit to the German Bakery started by your German friend, who will also be more than eager to tell about the challenges and experiences of living and working at the destination.
Refer Customers to Other Agencies if You Do Not Have Expertise
It may sound strange to refer your customers to your competitors, but there are good reasons to do this under some circumstances. If you have no knowledge about the products and services your customer is asking for, it can take you a lot of time to do the necessary research, make new supplier contacts and contracts, and write new itineraries to finally present your customer with a good offer. Even after that, you are still likely to come off as a non-expert, risking that you give your customer a disappointing experience, and risking your own credibility as a good travel agent. Instead, be honest and tell your clients what you are an expert at (and what you are not). Then refer to another travel agency. This will not only boost your credibility, it can also give you useful alliances with other travel agencies. Remember to notify them that you suggested their services to a customer.
Join Big Global Players When You Can’t Beat Them
The online hotel booking portals, the OTAs (Online Travel Agencies) like Expedia, Agoda, Trivago, Booking.com, and Hotels.com, have firmly got their grip on an increasing number of consumers, and in many cases the grip extends to hotels, who simply cannot avoid OTAs if they want high occupancy rates. With their massive volume, OTAs offer competitive rates for customers, and their large teams of web and user experience designers have made booking a hotel convenient and seamless. Generally, traditional travel agencies should not offer simple packages that can easily be bought online on hotel booking portals as their main bread and butter. It is simply too difficult to beat the OTAs at their own game.
But the good news is that as a travel agent, you can make an affiliate deal with many of the OTAs, and get a small commission on what you sell. You will be able to match the rates your clients can find themselves on the booking portals, and you will suddenly have booking access to hotels all over the world without having to make contracts with them and worry about costly foreign money transfers. So while you sell your core niche products, you can easily expand your services to include more generic products also.
Be Quick and Agile
Customers have become accustomed to instant confirmations on their online booking requests. Not long ago, they would have had to wait for at least a couple of days and sometimes more than a week to get a quote on their holiday package. That doesn’t work now. If customers don’t get a response quickly on their inquiry, they will start to look elsewhere. In case a travel agency cannot give a quote more or less instantly, at least they should respond to the request and tell the customer when they expect to return with a proposal.
On special requests, it often takes more time to get information on product availability and details. This varies greatly depending on the product and service type requested and the geographical location – it is much faster to get a quote and confirmation on a Bangkok hotel than a mountain hike package on Borneo. If the core part of the itinerary has been confirmed with a rate, as a travel agent, you may want to take a small risk and confirm everything in order to get back to your customer quickly. For example, there is no need for waiting on an airport transfer confirmation if all else is in place. Here you can make a qualified guess on the rate, knowing that you have to deal with any deviances later if the rate should not hold water.
Lastly, you have to have a strong presence online. Potential customers have to be able to find your travel agency and the holiday dreams you sell online. Today, the first contact and interaction with a new customer is almost always online.
Don’t Focus on Products Already Available Online
The products that are easily booked online are hard to sell as a travel agent. Customers can instantly check the rates of larger and more powerful competitors who thrive on booking quantity, not profit margin. The tourism products and services you can find and book online are usually standard items that can only be customized to a limited degree. As a relatively small travel agency, you want to focus on special tailor-made products and unique experiences for your niche market along with giving your customers the personal service that the big online players can’t give. It’s not that you can’t or shouldn’t sell standard travel services, but do so only as a supplement to your core products. As mentioned earlier, you may not want to earn much on standard offerings, because customers will likely cross check your prices to see whether they are competitive in the online market.
Don’t Compete On Price
Competing on price means that you are trying to offer the lowest rate on a product that is also being sold by other businesses. This means that you have to earn next to nothing per order, which again means that you have to sell a lot in order to survive. This is what large online travel agencies do, and they have become so good at it that they can now force tourism suppliers into lower and exclusive rates. As a small travel agency you can’t get this net rate unless you sell massively. To sell massively you may have to mark down your selling rates just to be competitive, meaning that you essentially lose money when you sell, but hope to get market share and volume in return. Only then you can negotiate for better net rates. This is obviously taking a big risk, because you are likely up against giants with more power, money, and hardcore price strategists. A slightly different course of action is to add more than a good price to the products and services you sell, so what you sell at least becomes slightly different from what big competitors sell two clicks away.
Don’t Expect Loyal Customers
Loyal customers are out there, but regardless of what you sell, their numbers have been and are still shrinking. This is, of course, a result of quick price and product comparisons being available online and a greater number of competitors transgressing the geographical boundaries of the offline world and offering the same products as you online. In the world of travel, it is not uncommon that customers send the exact same holiday request to 5-6 different travel agencies. Whichever agency returns with the best itinerary and the most competitive deal gets the booking. This is the reality traditional travel agencies live in. They can use hours of research, send emails to suppliers for quotes and ideas, and put it all together in a neat package, only to learn that the customer has accepted an offer from someone else. This has meant that many travel agencies now are forced to take a fee for taking on a request. The fee will be waived if the customer ends up buying. This is a viable way of committing the customer to the agency and not risk wasting several working hours and disappointing suppliers for nothing. Another way out of this problem is to tailor a handful of packages beforehand that can be used as a starting point to send to customers. The more generic the travel request is, the more likely you are to be unknowingly competing against other travel agencies.
Travel Agency Survival in Conclusion
There are great challenges for travel agencies, and there are many reasons to not succeed. The biggest one is probably not adapting to the new realities facing the world of tourism agents and suppliers. Luckily, this new reality also brings a lot of opportunities of new markets, new sales channels, new technologies, and new partners. But travel agents have to be much more than passionate travel experts – they need to think strategically, utilize social media and be savvy online marketers, be innovative, understand how they bring extra value to customers, and know their limits.
Want more on the Survival of Travel Agencies?
If you want more information on how travel agencies must adapt to the new realities of the transparent and online market place, and how they can overcome the threats from bigger online players, we recommend the following articles:
- “Travel agents survive in the age of the Internet” by Jason Singer, writer from the Portland Press Herald.
- Read the annual “Survival Guide” reports from Travel Agent Central, covering a good number of issues on how to succeed as a travel agent.
- “Top 20 things every travel agent should do right now, online and offline” by Tnooz. Title says it all.
- Special tips from 11 travel agents: “11 Experts Share Their Number 1 Tip for Becoming a Travel Agent“
Did we forget any Do’s & Don’ts or valuable resources? We welcome you to add to the list in the comments field below.