The demise of the independent agent has been predicted for as long as I can remember.
With the growing consolidation in the industry and new distribution channels such as the Internet and digital TV now on stream, the merchants of doom are even more convinced that retailers are going to have a tough time in the near future.
But our guests today have a different view – we have a mixture of leisure and business travel agents and consolidators. No-one would be surprised if they were pessimistic about the future, but most were confident of prospering in the new millennium.
Of course they expect big change, but are convinced that forward-thinking agents who concentrate on providing their clients with a good service can prosper in the next century.
The Internet
Flightbookers chairman Dinesh Dhamija believes the potential of the Internet is enormous and is spending a great deal of time on his new venture – ebookers.com. But Dhamija also expects it will take time before package holidays are booked en mass over the Internet and he still sees a major role for agents. He said: “Holidays are difficult to book on the Internet at the moment, it’s not interactive. This will take a couple of years.”
“But an agent can use the Internet and always be a good “info-mediary”, offering even-handed advice because it is not supporting any one airline or operator.
“I think as we progress, the smaller agent will find it difficult to make money because the bigger guys have better buying-power.”
Chartwell Travel director Gordon Winrow claimed the Internet had limitations because users had to commit themselves to a purchase.
“You can use the Internet as a tool,” he said. “But it’s nothing special, it’s not that wonderful. At the moment, all the information is already on global distribution systems, they just don’t look as nice.”
Rosenbluth International associate director Paul Tracy pointed out the role agents can play in providing unbiased advice to clients who are swamped with information on the Internet.
“There is an advocacy role for the independent,” said Tracy. “He is not beholden to anyone and can pull all the different elements together. There’s always room for good specialist agencies.
“People will look for someone to help them with the burden of choice.”
The consensus among the group was that agents would have a “clicks and bricks” strategy – they will have an Internet presence but will also have shops on the high street.
“One scenario for the future is that customers could make a booking on the Internet and then go into the shop just because they are passing by and pick up the ticket,” said Dhamija. “But another is that you can go into the shop for advice and help from the agent.”
New technology
Dhamija revealed that recent studies in the US predicted that by 2010, 30% of all travel will be done by the Internet and digital television. He emphasised that although the new media will have a huge impact, the majority of people will still book holidays through traditional channels.
Travelbag marketing director Julie Tamblyn added: “With digital TV, you don’t need a computer,” she said. “When it’s in the living room – that’s when it will really have an impact.”
Dhamija also predicted agents will be using e-mail more extensively in the future to communicate with clients.
“It certainly trumps the fax – it’s cheaper and more convenient,” he said.
E-ticketing for clients will grow, but will only become more widespread when all countries accept and recognise it.
Some 40%-50% of domestic bookings in the US are done by electronic ticketing, but it took a long time, commented Dhamija.
“There are certainly some countries where I wouldn’t want to go at the moment unless I had an old-style ticket,” said Tracy.
Inside the agent
Our guests felt that agents would have to combine exemplary service in an environment where people enjoy spending money. Swedish furniture-giant IKEA was cited as a good example of a shop with a difference, which people like to visit.
“What people want is a welcome, a good service and to be comfortable in a pleasant environment,” said Tamblyn.
She added that in the future, agents will have to offer value to customers through exemplary service to stop clients going direct.
“The Internet is just another distribution channel,” she said. “In the future there is going to be a difference between those that are selling packages and those putting their own itineraries together. If you are only selling a mass-market package you will have to have amazing knowledge or service to stop people going direct.”
Dhamija even suggested that the global distribution systems could do something to make the experience more enjoyable and by doing so stand out against their competitors.
Mergers and consolidations:
Despite the European Commission blocking Airtours’ attempt to purchase First Choice, our panel felt sure that consolidation will continue.
Dhamija said the market was mature and now everyone is looking to save costs while Winrow said many mid-sized companies were looking to sell out.
Tracy added:”Like other industries there is a move for consolidation. But that does not necessarily mean there will be barriers to entry because with the Internet there are lots of opportunities. It’s cheap to get on.”
Some felt that big brands, like Marks and Spencer or Tesco, might get involved in the sale of travel.
“People will buy into big brands on the internet,” argued Tamblyn. “What’s stopping Marks and Spencer from buying a specialist company and putting it on the net?”But Winrow was more sceptical:”If Marks and Spencer could make money out of travel, they would have done it by now. Look at WH Smith – it failed to make bookstores sell travel.”
Commission charges and service fees.
Winrow has already started charging some clients service fees and believes this trend will grow. Currently he charges a service fees on some products where commission has been reduced – thereby getting the double hit of a commission and a charge from the client. But he believes that currently the trade can still have a huge impact on sales and have the power to demand commission.
“Who would have believed 12 months ago that the trade could have the impact on British Airways’ and Thomson’s business that it has had?,” said Winrow.
“BA thought it could give the trade 7% commission and push a lot of bookings direct and 12 months later it is having to court the agent. Thomson has also suffered from independents turning their back on them.
“In the future we’ll have a mix of commission and service fees. I went to a seminar on service fees and then decided to charge fees and we’ve only lost two clients, who to be honest, were a bit of a pain anyway.”
On the subject of low-cost airlines, our panel felt they would have an important role to play in the future but, as the recent collapse of Debonair proved, only the fittest will survive.
“I love low-cost airlines, they give consumer a much cheaper option,” said Dhamija. “But I hate competing against them.”
Predictions for the future:Dhamija:”I would say to agents, go European rather than sticking with one market. I would maybe invest in call centres in Europe and use that buying power to negotiate better marketing deals.
“Service will be 24/7 – 24 hours a day, seven days a week.
“And what about adding something like financial services? Agents are already selling travel insurance, so why not home insurance and motor insurance?”
Tamblyn:”People have got to be better trained and more professional. We’ll also have flexibility in the working pattern and more home-working.
Karim:”I agree there needs to be more training and more support for the industry.”
Winrow:”Airlines should give a decent commission, but service fees will become more prevalent because you can’t survive without them. Airlines will have to improve their service, at the moment they are very nine to five.”
Tracy:”On business travel we’ll be an advisory service and one of the things we might be doing is advising people when not to travel. With video conferencing, it is not always necessary to go away. We will, of course, charge for that advisory service.”
The demise of the independent agent has been predicted for as long as I can remember.
With the growing consolidation in the industry and new distribution channels such as the Internet and digital TV now on stream, the merchants of doom are even more convinced that retailers are going to have a tough time in the near future.
But our guests today have a different view – we have a mixture of leisure and business travel agents and consolidators. No-one would be surprised if they were pessimistic about the future, but most were confident of prospering in the new millennium.
Of course they expect big change, but are convinced that forward-thinking agents who concentrate on providing their clients with a good service can prosper in the next century.
The Internet
Flightbookers chairman Dinesh Dhamija believes the potential of the Internet is enormous and is spending a great deal of time on his new venture – ebookers.com. But Dhamija also expects it will take time before package holidays are booked en mass over the Internet and he still sees a major role for agents.
He said: “Holidays are difficult to book on the Internet at the moment, it’s not interactive. This will take a couple of years.
“But an agent can use the Internet and always be a good ‘info-mediary’, offering even-handed advice because it is not supporting any one airline or operator.
“I think as we progress, the smaller agent will find it difficult to make money because the bigger guys have better buying power.”
Chartwell Travel director Gordon Winrow claimed the Internet had limitations because users had to commit themselves to a purchase.
“You can use the Internet as a tool,” he said. “But it’s nothing special, it’s not that wonderful. At the moment, all the information is already on global distribution systems, they just don’t look as nice.”
Rosenbluth International associate director Paul Tracy pointed out the role agents can play in providing unbiased advice to clients who are swamped with information on the Internet.
“There is an advocacy role for the independent,” said Tracy. “He is not beholden to anyone and can pull all the different elements together. There’s always room for good specialist agencies.
“People will look for someone to help them with the burden of choice.”
The consensus among the group was that agents would have a ‘clicks and bricks’ strategy – they will have an Internet presence but will also have shops on the high street.
“One scenario for the future is that customer could make a booking on the Internet and then go into the shop just because they are passing by and pick up the ticket,” said Dhamija. “But another is that you can go into the shop for advice and help from the agent.”
New technology
Dhamija revealed that recent studies in the US predicted that by 2010, 30% of all travel will be done by the Internet and digital television. He emphasised that although the new media will have a huge impact, the majority of people will still book holidays through traditional channels.
Travelbag marketing director Julie Tamblyn added: “With digital TV, you don’t need a computer,” she said. “When it’s in the living room – that’s when it will really have an impact.”
Dhamija also predicted agents will be using e-mail more extensively in the future to communicate with clients.
“It certainly trumps the fax – it’s cheaper and more convenient,” he said.
E-ticketing for clients will grow, but will only become more widespread when all countries accept and recognise it.
Some 40%-50% of domestic bookings in the US are done by electronic ticketing, but it took a long time, commented Dhamija.
“There are certainly some countries where I wouldn’t want to go at the moment unless I had an old-style ticket,” said Tracy.
Inside the agent
Our guests felt that agents would have to combine exemplary service in an environment where people enjoy spending money. Swedish furniture-giant IKEA was cited as a good example of a shop with a difference, which people like to visit.
“What people want is a welcome, a good service and to be comfortable in a pleasant environment,” said Tamblyn.
She added that in the future, agents will have to offer value to customers through exemplary service to stop clients going direct.
“The Internet is just another distribution channel,” she said. “In the future there is going to be a difference between those that are selling packages and those putting their own itineraries together. If you are only selling a mass-market package you will have to have amazing knowledge or service to stop people going direct.”
Dhamija even suggested that the global distribution systems could do something to make the experience more enjoyable and by doing so stand out against their competitors.
Mergers and consolidations:
Despite the European Commission blocking Airtours’ attempt to purchase First Choice, our panel felt sure that consolidation will continue.
Dhamija said the market was mature and now everyone is looking to save costs while Winrow said many mid-sized companies were looking to sell out.
Tracy added:”Like other industries there is a move for consolidation. But that does not necessarily mean there will be barriers to entry because with the Internet there are lots of opportunities. It’s cheap to get on.”
Some felt that big brands, like Marks and Spencer or Tesco, might get involved in the sale of travel.
“People will buy into big brands on the internet,” argued Tamblyn. “What’s stopping Marks and Spencer from buying a specialist company and putting it on the net?”But Winrow was more sceptical:”If Marks and Spencer could make money out of travel, they would have done it by now. Look at WH Smith – it failed to make bookstores sell travel.”
Commission charges and service fees.
Winrow has already started charging some clients service fees and believes this trend will grow. Currently he charges a service fees on some products where commission has been reduced – thereby getting the double hit of a commission and a charge from the client. But he believes that currently the trade can still have a huge impact on sales and have the power to demand commission.
“Who would have believed 12 months ago that the trade could have the impact on British Airways’ and Thomson’s business that it has had?,” said Winrow.
“BA thought it could give the trade 7% commission and push a lot of bookings direct and 12 months later it is having to court the agent. Thomson has also suffered from independents turning their back on them.
“In the future we’ll have a mix of commission and service fees. I went to a seminar on service fees and then decided to charge fees and we’ve only lost two clients, who to be honest, were a bit of a pain anyway.”
On the subject of low-cost airlines, our panel felt they would have an important role to play in the future but, as the recent collapse of Debonair proved, only the fittest will survive.
“I love low-cost airlines, they give consumer a much cheaper option,” said Dhamija. “But I hate competing against them.”
Predictions for the future:Dhamija:”I would say to agents, go European rather than sticking with one market. I would maybe invest in call centres in Europe and use that buying power to negotiate better marketing deals.
“Service will be 24/7 – 24 hours a day, seven days a week.
“And what about adding something like financial services? Agents are already selling travel insurance, so why not home insurance and motor insurance?”
Tamblyn:”People have got to be better trained and more professional. We’ll also have flexibility in the working pattern and more home-working.
Karim:”I agree there needs to be more training and more support for the industry.”
Winrow:”Airlines should give a decent commission, but service fees will become more prevalent because you can’t survive without them. Airlines will have to improve their service, at the moment they are very nine to five.”
Tracy:”On business travel we’ll be an advisory service and one of the things we might be doing is advising people when not to travel. With video conferencing, it is not always necessary to go away. We will, of course, charge for that advisory service.”