|A dead-end or a detour?|
Redefining travel agentsThe debate should be about redefining the purpose and function of travel agents for them to remain relevant in the marketplace. Instead of focusing on a rapidly shrinking scope of services still competitive to a diminishing customer pool, exploring new ways to deliver value and how to translate that into revenue would open a path away from the dead-end road ahead. The traditional model of sales commissions has become a mismatch as the sales process is increasingly detached from the transaction.
This is especially apparent with OTA which depend on review sites to generate sales while they themselves have become mostly transactional, worth only a nominal portion of the sales commission they collect. Hotel bookings decisions are increasingly being made on the review sites, like TripAdvisor, which have become the real “travel agent” providing much of the information the consumer relies on to make purchase decisions before going to a booking site, like Booking.com, for the transaction. Yet hotels are paying the commission to the booking sites rather than the review sites that actually generated the sale. While the booking sites do spend some of that commission money to advertise on review sites, it is an intermediary function the hotels could easily bypass and go direct at a lower cost while ensuring that their money is spent to promote their own properties, not that of the competition as is often the case (the infamous “visitors have also looked at these other properties…” driving them away from their own review page).
That leaves the OTA with only the transactional process as the service value, a fractional value of the commission rates typically paid to OTA. It may not turn out to be a great future for OTA as transaction service providers begin to compete in earnest against them. They are more convenient and their fees are comparable to that of bank card processing, a fraction of that of the travel trade commission rates.
Exploring other avenuesAirAsia, the airline that has figured out many clever ways to make sure that “Now everyone can fly”, has a new option to pay for bookings made online without a bank card: the bookings made online, most often on a smartphone, can be paid for in cash at any 7-11 convenience store in Thailand, already the most popular place to pay electric or phone bills. With over 7000 stores nationwide, it is indeed an easy convenience. While that option is probably not suited for hotel bookings, it shows how innovation and fresh thinking can open new roads to success for travel agents, even if they have to drastically change their business model and become known as travel “something else” instead of travel “agents”.
One avenue for traditional travel agencies could be to convert to travel stores, located in major shopping malls, selling related travel and leisure products while promoting resorts and travel destinations within the environment. Far from being limited to luggage and power converters, travel stores can offer a very wide range of products: clothing, books, cosmetics, etc. while featuring wall video and marketing material of resorts and travel destinations who pay for the prime value of exposure and promotion in major shopping malls.