Travel agents on a youtravel.com-hosted trip to Rodos Palace in Rhodes, Greece, discussed concerns for the year ahead and how dynamic packaging agents will have to rethink the way they do business to get through 2009. Juliet Dennis reports
Redundancies as a result of the economic downturn could have a serious impact on trading next year, according to travel agents at a round-table debate.
Travel Trust Association director Steve Clark said: “There will be a severe downturn next year. If there are redundancies it will affect our industry.”
A1 Travel managing director Chetan Patel added: “Next year people will look at what they spend and cut down on shorter holidays.”
He warned dynamic packaging agents could be worst hit. “The big two [travel companies] will be winners. Capacity has been cut so flight prices will go up, so anything we sell will go up. They [major operators] are selling packages 5% cheaper than we can sell it at net.”
Freedom Direct managing director Nick Jackson agreed flights taken out of the market by XL Leisure Group’s demise were a major issue for dynamic packaging agents.
He said: “This winter started on September 12. We are just waiting to find out how it’s going to play out. A big factor for us will be [flight] supply.”
The creation of Kiss Flights by former XL staff could help, he added. “Kiss Flights is small but could soak up demand if it can be reactive. There is an opportunity for more to come in.”
January sales
The peak sales period could enjoy a boost despite the downturn, said Jackson.
He added: “It’s hang yourself time at the moment, but in January things might be a little rosier. Low-cost carriers’ best prices are in January so if you don’t book then you will miss out.”
Qwerty Travel sales manager Matt Todd said sales of dynamic packages could be helped by bed banks contracting accommodation earlier, with stock on sale from now for next summer.
He added: “People who missed out on a holiday this year will book early for next year.”
Patel said: “Fuel prices are coming down. People will book early; the question is whether they will book a dynamic package or a conventional package.”
But youtravel.com sales and marketing director Paul Riches maintained people would book later because of financial concerns unless there was a “compelling reason” to book early.
Spend
Todd predicted customers will spend more on their main holiday as it will be their only one.
He said: “Because people are only taking one holiday a year, they will look at spending one-and-a-half times the amount on it. Whether they buy all-inclusive or not, we will all need to look at what products we are selling to target that market. Customers will want one main holiday and they will want it to be perfect.”
But Patel warned of a return to more allocation-on-arrival holidays as sectors of the market demand cheaper holidays.
“Can we start selling allocation-on-arrival again, going back to 10 years ago? Customers going away next year will not be able to afford that bit extra. The important thing will be how much that customer can afford next year.”
It could mean dynamic packaging agents securing their own airline seat allocations, he added.
Commission
Agents will have to sell more add-ons to boost their bottom lines as commission payments and company margins will inevitably be squeezed next year, the panel agreed.
Todd said agents will be forced to discount more commission to gain a competitive edge to win bookings. “Everyone is going to be penny-pinching. We will have to give away more commission.”
Riches said: “Margins will be squeezed next year. Customers are the ones that are winning. They will get cheaper holidays as it gets more competitive.”
Todd said the onus will be on agents to find ways to boost revenues, and this could mean selling more extras such as excursions, airport hotel stays, attraction tickets, car hire or transfers.
Staffing levels
All businesses will be forced to look at staffing levels next year.
Clark said: “I am not saying we are overstaffed but I think we will have to look internally at our own costs. Let’s use the recession to get ourselves fit and ready [for when bookings return].”
Jackson added: “More than ever we are focusing on every staff member. You have to look at every staff member’s contribution to the business.”
Riches said: “If any company is not looking at its cost base, it is not running its business properly.”
Financial protection
Financial cover to protect holidaymakers from further failures is going to be critical next year (see The future of financial protection, Travel Weekly October 17).
Jackson said: “The demise of XL has highlighted the need to focus on consumer protection and derisking ourselves as much as possible.”
Patel called for a change in the way customers are protected. “The government has got to intervene; everything that is travel related has to be protected,” he said.
“What’s the point of having bonding in place with the Civil Aviation Authority and ABTA when you may as well get supplier failure cover – let the customer decide if they want to be covered or not.”
But Clark argued this was not fool-proof. “The CAA has the government behind it to pick up the bill. What happens if the scheduled failure insurer goes out of business? There is no easy fix, but the customer has to be protected.”
Destinations
Greece could have a tough year next year because fewer flights are serving the destination following XL’s collapse, Riches warned. “It will be tougher for Greece next year. People who go to Greece will switch to other destinations, compared with Spain, which has a real hardcore of people who go back every year.”
Todd agreed, but said: “The business will come back. People love Greece.”
Florida is another market likely to suffer from the worsening dollar exchange rate, while non-euro countries could benefit again from the poor euro-pound exchange rate, said Clark.
The panel
- Chetan Patel, managing director, A1 Travel, Ilford, Essex
- Nick Jackson, managing director, Freedom Direct, Newcastle
- Matt Todd, sales manager, Qwerty Travel, Surrey
- Steve Clark, director, Travel Trust Association
- Paul Riches, sales and marketing director, youtravel.com
- Liz Garfield, national sales manager, youtravel.com
Read about the fun side of youtravel.com’s trip to Rhodes, and check out the photos on our flickr gallery…
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