TRAVEL agents need to be trained to operate in all sales channels to survive in a market that could see a further 500 shops owned by the big four operators close within three years.
That’s the opinion of retailers who gave an overview of the market and challenges ahead in a round-table discussion held at Libra Holidays’ fifth annual VIP trip to Cyprus at the InterContinental Aphrodite Hills Resort Hotel in Paphos.
Advantage managing director John McEwan predicted 500 multiples will close, opening the door for independents. “There will be 1,000 multiples left between the big four – the reduction started three years ago and will continue for the next three years,” he said.
All delegates agreed that agents needed training to avoid being just ‘brochure bookers’ and offer product through all channels.
But Travel Republic managing director Paul Furner warned of the cost of setting up online businesses. He admitted: “It’s genuinely hard to come into the Internet world cold and to get your brand name going. It’s difficult to sleep at night sometimes.”
Taking part in the Travel Weekly debate were Travel Republic managing director Paul Furner, Freedom Direct commercial director Nick Jackson, Midcounties Co-operative deputy general manager travel group Sue Reid, Advantage managing director John McEwan, Libra Holidays account manager Julie Haddon, Barrhead Travel chief executive Bill Munro and Midconsort Elite chief executive Charles Eftichiou
Short-term future
John McEwan: “You have to get control of your own product if suppliers will not pay a decent price. The only way to prosper is to become specialist.”
Julie Haddon: “We have to think about how much we spend to get people to book in the new year. It doesn’t look like it’s going to be a great January.”
Nick Jackson: “As people get used to booking early with the low-cost carriers, they will realise six months before they go they can get the best holiday deal.”
Bill Munro: “Price models [of low-costs and operators] have converged in Scotland. Airlines becoming operators is the biggest threat going forward, it doesn’t matter if you can dynamically package your socks off.”
Charles Eftichiou: “The biggest challenge is whether operators can keep a cool head until March – I doubt it. There will be pressures to discount.”
Paul Furner: “We have a good transactional site but the challenge is to develop it with user-generated content to make people come back again.”
Sue Reid (pictured, above): “We will open more travel branches in our food stores. We’re letting customers search online in our Ultra stores. We’re doing staff workshops with tourist boards and operators to ensure our agents are a step ahead.”
Nick Jackson: “In the call centres it’s got very expensive to generate sales and we’re consolidating staff. For us, training is a big part of that.”
Distribution
John McEwan: “Retailers on the high street will be integral to the mix but their overall share of the market will decline. Inevitably, some will fall by the wayside. The vertically integrated groups grew massively in the late 1990s, now you will see them contracting. This will give an opportunity for independent agents.”
Charles Eftichiou: “There is a major part for the high street to play. We’d like to see more agents get multi-channel distribution.”
Sue Reid: “We want to be available 24 hours a day and we want people to use our websites after 5.30pm but we also want to keep people coming into the branches.”
Bill Munro (pictured, above): “Prices will standardise. I don’t think there will be any difference between the price in the shop and online. The cost of operating a website is expensive – it is not cheaper to sell online. The ones who succeed will be those with the best prices.”
Paul Furner: “All our technology is done in-house and it’s an expensive area to operate in. A lot of companies need to go through third-party providers. I am not sure there will be big winners but there are definitely opportunities for niche players.”
Nick Jackson: “It’s very challenging. Dynamic packaging business has grown for us but we do not see ourselves becoming entirely dynamic packagers. It’s important to still use key suppliers and develop our relationships with operators.”
The market
John McEwan: “Overall the market is down 10% on core packages, but long-haul, cruise and UK destinations are doing well. We continue to see growth in dynamic packaging.”
Julie Hadall: “We are around 10% down, with 10% less capacity than last year. You can cope with that but it’s hard when load factors and average values are hit.”
Sue Reid: “We’re about 10% down on passenger heads this summer. We are focusing on getting staff to behave differently. They cannot be audit takers.”
Paul Furner (pictured, above): “People are more confident about constructing packages online. More agents are trying to get into the Internet; competition is fierce. It’s easy to burn cash quickly but you have to know what you’re doing on the Internet.”
Charles Eftichiou: “We’ve sold fewer passengers at higher prices so margins have been protected to a degree. The mystery is where the family market has gone.”
Bill Munro: “A lot of people are micro-managing their businesses. We’ve all been going for growth for a number of years and now we’re all cutting costs. In our marketing we have to retrain staff to stop them from being brochure bookers.”
Nick Jackson: “It was as tough a summer as it’s ever been. There has been availability and yet demand has not been as strong. We’ve had to make adjustments to our business in terms of cutting fixed costs.”