Lunch with Travel Weekly – the Internet

Debate on the future prompts virtual agreement about the Net.

In the second of a two-part series hosted by Amadeus UK managing director Graham Nichols, Travel Weekly editor Jeremy Skidmore asked Manchester agents to debate the future and summarised their views.

Digital Television will allow people to book holidays via their set from the comfort of their own home. Jetset Europe managing director John Bond, an agent and an operator, expects this to have a significant impact, initially with those people who are confident of booking direct.

“A lot of people don’t use travel agents and I think it will start with those people,” said Bond. “In time, it could also eat into the travel agent market.

“If you look at skiing, the market may be some 500,000 passengers but if you take the self-drive market you can double that. There are a lot of DIY bookers who will be attracted by digital television. So what operators and agents need to do is bring forward new markets.”

Bond said he was concerned about the financial muscle of some of the players on digital television but added there was plenty the agent could do to maintain his business.

“There are lots of things that offset digital television,” said Bond. “Agents can use the internet to put intineraries together and have a direct interface with the customer. You’ve got to work on your brand and the way we package our holidays together.”

Aintree Travel partner Ron Booth, who has lived through decades of change since setting up his business in 1956 is yet to be convinced about digital television.

“We have digital television and it’s not cheap,” he said. “Also, when you’re using it you can’t watch the television. The jury is still out on digital and I’m not unduly worried because we can offer a far better service.”

Ariel Travel proprietor, Jim Tadgell, pointed out that digital television cannot sell holidays in the way that independents can.

“I wonder if people want to spend hours in front of the television set when they can go to the agent and let them do the hard work,” said Tadgell.

“Those offering bog standard holidays will suffer but those offering truly independent service will survive.”

Internet

Booth may now be one of the elder statesmen of the industry, but he knows he cannot stop the pace of change and is attempting to embrace new technology.

“We’ve gone to town on the Internet and we’ve got a new Web site going live,” he said. “We’ve also got our own private intranet network. The client in due course will come into our intranet to affect reservations, initially requesting holidays, but in time making bookings.

“We will have two attacks on the marketplace – offering our service locally and hopefully getting business from around the world.”

Travel by Design of Alderley Edge managing director Kristina Hulme believes she can use the Internet to her advantage because she is tailor-making packages for wealthy clients in Cheshire. But she fears for those who are relying on bucket-and-spade holidays.

“I will use the Internet as an enhancement to my own knowledge” said Hulme.

“People don’t have time and I can sort out the best holidays for them. But I believe those selling bucket-and-spade holidays will be in trouble.”

Astley Bridge Travel chairman and director Barrie Harthern agreed. “You must be a specialist on the Web, you can’t just offer package holidays. I’ll have a Web site in January.”

Harthern was also sceptical about the current power of the Web.

“Everyone you speak to says they’ve had loads of hits on the Web but no bookings. “

Tadgell said it was important to his company’s image to have a Web site. “It’s a perception you are professional,” he said.

Bond warned people not to bury their heads in the sand over the power of the Internet. In response to Hulme’s claim that the British are conservative and do not like to give their credit-card details over the Internet, Bond said: “Shoppers will move from Teletext to the Internet. I know people will commit money down the line.”

All our guests were sure agents would have to change very quickly over the next few years.

Tadgell fells they cannot survive in their current form and thinks the days of several editions of brochures are limited.

“In the future there won’t be the need for all these brochures – you will be able to look at one for the year as a selling tool, with insets,” he said. However he did not envisage branching out and perhaps selling home and motor insurance as well as travel insurance.

“I always say I’m busy enough selling holidays and holiday insurance to worry about anything else but other retailers are getting into travel, so maybe we should sell other things,” said Tadgell.

Bond claimed that in the future people would probably be travelling with just one piece of paper which will contain bar codes with confirmation of airline seat, hotel and itinerary.

“Why do we still have boarding passes?” he asked. “We have so much paper yet we already have the capability to be paperless. We could have one piece of paper for everything but it has to be driven by too many parties.

“If the big boys wanted it, it could happen tomorrow but it will probably be several years.”

Hulme said many agents would not get bigger but better.

“I’m totally service orientated and I will go through any number of hoops to match you to the right holiday,” she said. “But there’s only a number of operators I trust to service me like a client rather than an agent.”

Tadgell envisaged using the Internet in his agency to help clients. “A professional agent will be able to assimilate stuff from the Internet.

“The suppliers only show you what they want to on the Internet and you will need the agent to say, ‘perhaps that hotel isn’t as good, have you tried this other hotel?'”

Bond believes that people walking into a high-street agent will see very different surroundings.

“We’ve got these big fat screens from the 1960s. You will have these very thin dual information screens so the public can see what is going on. The next thing will be virtual reality which no-one has really embraced yet. It allows you to get a taste of a holiday. If you see the Grand Canyon, it will make you want to go. It won’t be a case of seeing it and then thinking you don’t need to travel there.”

Harthern also feels that other retailers will be tempted to start selling holidays, creating further competition with high street agents.

“We’ve already got implants in ASDA stores. They’re also doing annual travel insurance for £57.50.”

But Hulme was more sceptical. “I don’t think the margins are big enough,” she said. “You can make more money in other types of retailing.”

The agents believe there is little future for the retailer who wants to stay truly independent and refuses to join a consortium.

“I think by 2003 you’ll be able to count the number of true independents on your fingers,” said Harthern. “The only ones left will be part of a consortium. And where will that leave ABTA? A lot of agents will think they don’t need ABTA.” Bond agreed that consortia could hold the balance of power and Tadgell added: “There will be casualties among independents, particularly those who book bucket-and-spade holidays. The business has to be going more towards service for the client.”

Tadgell expects business travel to be conducted purely on management fees in the future. But he predicts a different scenario for the sale of holidays.

“Airlines are trying to cut costs and want to get to zero commission as soon as they can get away with it,” he said.

“But on the leisure side it’s more price driven so I don’t think people would wear it. I think tour operators are going to have to carry on paying commission in the future.

“There should be a base of 10% commission with more for people who produce. But I think 10% is the minimum.” Bond believes agents can get more in the future.

“The dilemma for tour operators is that they have given a percentage and sometimes that’s a lot for a high value booking and not much for something else,” he said. “We have to add value and I think that if we can, we can get more than 10%.”

Harthern added: “In leisure, commissions will go up but only for consortia and multiples. The little one-off boy will be dead.”

Harthern: “The customer will be able to see what the agent is doing on a split screen. And in three or four years’ time, independents will join consortia or they won’t survive.”

Hulme: “Independents will be more service orientated. I’ll look for passengers who have the least amount of time, people who are cash rich and time poor.”

Tadgell: “Individual agents must use the Internet and digital television correctly and then they will survive. I have to get out of the mass market because it is not viable for independents.”

Bond: “A new breed of entrepreneur will come into the market breaking new ground in a way that we haven’t seen before. They will change the way holidays are sold and they will work from home.”

Booth: “It will be more difficult to survive on the high street so the only thing I can do is to broaden my horizons by going out into the market on the Internet.”