The ‘Return Of The Travel Agent’ … Again
The Data Behind Their ‘Comeback’ And The Generation That Is Making It All Possible
Travel agents are back (again)! The only reason this is a headline is because the OTA’s spent 15 yrs convincing consumers that Travel Agents were a day away from being obsolete. It was pure marketing/spin and it worked to a shocking extent, but now that reality has set in, destinations and suppliers alike see travel sales benefiting from the high touch service a computer can’t deliver, and continuing to invest in the trade channel. Now AI might change that (along with scores of other professions), but we are a decade away from that reality, and a topic for another time.
Truthfully, advisors never even got close to disappearing, the numbers have dwindled a bit, but nowhere near the mass extinction we were told to expect… and they won’t anytime soon if specialization, expertise and Millennial’s have anything to say about it. The difference in the past decade depending on the report you read shows less than 20% shrinkage for full time travel professionals.
What has made a comeback is their value proposition and consumers perception. The charts below clearly illustrate that agents never stopped producing meaningfully. Ultimately it doesn’t matter, because looking forward most all agree that there’s certainly wind in their sails (and sales).
Certainly these are interesting times for agents and advisors. Recently I wrote a post on, what I believe is an unbelievable opportunity for agencies, given the recent mergerbetween Apple Leisure Group and The Mark Travel Corporation. Today I’m writing about some more positive news for the troops that make the magic happen for clients.
The latest Portrait of the American Travel (POAT) research conducted by MMGY, paints a very interesting picture for travel agents. Things are shifting, and this shift is being driven by the demographic force of the Millennials.
Throughout this post, I’m going to pull some key findings from the POAT study to illustrate why being a travel agent is looking up and implications for moving forward.
Let’s begin with the number of travelers using a traditional agent. In the chart below the percentage of total vacations aided by a traditional travel agent has dropped four points from 2016 to 2017. However, the percentage of travelers that have used a traditional agent for one trip in the past 12 months has stayed relatively constant.
Breaking down the findings, in today’s day and age, I think it’s rare for an agent or agency to get 100% of a customer’s bookings. That just isn’t going to be happening any more. For starters, technology has made it incredibly easy to make a booking. And some bookings are just more straightforward and aided by tons of options. On top of that, more and more people are comfortable making their own online booking.
Add to this the rise of domestic travel — more specifically drive vacations. Those hitting the open road have a tendency to do it themselves and take care of their own travel accommodations and needs. So, although the percentage of total vacations aided by a traditional agent has dropped, the more interesting number can be found in the next row.
The percentage of travelers using an agent for “at least one vacation” has improved since 2013 and has stayed relatively constant from then on.
The story gets better.
In the next chart — likelihood to use a travel agent — the numbers in two key areas Vacation package/tour and cruise line are continuing to climb year-after-year.
What’s driving the change? My theory is this:
Over the past 5–10 years, as the travel space has continued to expand, more and more options have filled the marketplace. Take the cruise industry, for example. Consider how crazy that space has become. Not only does a customer have to decide on where they want to cruise, they also have the complex choice of determining how they want to cruise. The amount of options available are staggering. And more options lead to increased frustration on the part of the client looking to make a booking. And this tension is playing right into the hands of the qualified agent and is being reflected in the numbers.
As the amount of choices multiplies, customers are looking for ways to help narrow in on choices not expand them. They are looking for simplification and recommendations. Think Netflix and Amazon with their recommendations.
That data gets even more interesting when we see the breakdown by generation. We begin to see a greater affinity between travel agents and the Millennial generation.
33% of Millennials indicate they have used an agent for at least one vacation during the past 12 months. That number is impressive in and of itself but when compared to the other demos…that number jumps out! Clearly there is something going on. The percentage shift is significant.
But let’s go even deeper.
Not only are Millennials using agents, they are more likely to use the services of an agent in booking a variety of options. What blows me away is the difference in the numbers when it comes to “Choosing a Destination.” There’s a 21-point gap between Millennials and Xers and a 45-point difference between Millennials and Boomers!
In the table below, we get a better understanding of the top reasons for working with an agent by demographic. Millennials are using agents for the variety of services. But within that group product knowledge/understanding what’s hot and what’s not, and the ability to take the hassle out of booking travel are some of the top items. As agents work on attracting more and more Millennial customers, these are key points that need to be pushed in all forms of communications.
Some Closing Thoughts
In 2011, then President Obama made the following remarks about agents:
“…when was the last time somebody went to a bank teller instead of using the ATM, or used a travel agent instead of just going online. A lot of jobs that used to be out there requiring people now have become automated.”
While his comment didn’t earn him any points with agents, it was, for the time, directionally accurate.
But 2011 and 2018 are light years apart and things have turned for the agent community. And Millennials are the cause. Not only will this segment soon be the largest demo in the US, by 2020 Millennials will have spending power of $1.4 trillion. And they have the desire to travel.
According to the POAT study, Millennials report a 16 point positive variance in their intention to vacation during the next 12 months. Xers have only a 3 point positive variance, while Boomers report a negative one-point variance.
And if the story wasn’t strong enough, Millennials are using travel agents. This is a perfect storm of opportunity.
Let me add one other element to the agent story — the rise of social media. Yes, social media was around in 2011, but since that time has grown by leaps and bounds. And this shift makes it much easier for agents to market themselves, tell their story and connect with Millennials throughout these channels.
Indeed, this is a very interesting time for agents.
There’s another group that should be paying attention to these recent trends, and for the purpose of this post, I’m going to lump a number of different organizations into one general bucket. This group includes hotel suppliers, cruise lines, CVBs/DMOs and all the other organizations that deal with travel agents.
For the past 10 plus years, many within this group have paid little attention to the agent channel. This neglect was perhaps driven by the notion expressed by President Obama — agents were going away. The world would go online for all their travel needs. So, given this, why invest in this constricting channel?
By now, it’s clear the world hasn’t gone all online and it’s not going to happen anytime soon. Instead, we are seeing a shift toward agents! Given all this recent data and demographic shifts, I believe organizations also have an opportunity to gain business and grow market share by focusing more efforts on the agent channel in the coming years.
Yes, I believe agents have a rare opportunity right now. But don’t get me wrong…a great deal of hustle will be required to win over the Millennial traveler. There are still plenty of challenges to overcome. But for those agencies willing to put in the time and do the work — those agencies could be looking at decades of strong business.
If you are an agent reading this, please let me know how your business has been impacted by the Millennial generation.