How Can Travel Agencies Compete With Online Travel Agencies?

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Online Travel Agencies continue to dominate online bookings.  In a 2017 report, Eye For Travel and Jumpshot analyzed consumer purchase patterns over a two month period on a set number of OTA, hotel and airline domains, finding that OTAs hold a majority of the UK market (73%), and close to half of the US market (42%).  With online travel poised to reach $1.1 billion in 2022, according to Allied Research, the race to increase market share is heating up.

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Surprisingly, one of the new contenders in this race, are traditional travel agents.  While travel agents suffered a significant setback in their customer and deal volume, as tech savvy travelers began using OTAs and review sites to plan their trips independently over the past few decades, recent data shows a change in this trend.  In 2016, 19% of travelers claimed they booked via an agent, up from 12% in 2013, according to MMGY Global’s 2016 Portrait of American Travelers survey.

While OTAs may seem like the preferred channel today for travel bookings, travel agents can thrive in the digital era and gain back a portion of the market, if they know where and how to compete. 

So, how can travel agencies compete with online travel agencies, like Expedia, Orbitz, Booking.com and others? Here are a few tips:

Find your niche

Travelers from certain market niches have discovered that travel agents have a competitive edge over, well, themselves.  These travelers understand that, while they can research destinations, hotels, tickets, and attractions ad nauseam, there is a service provider who can do it better, faster, and even cheaper. 

The American Society of Travel Agents (ASTA) has found that travelers save 4 hours invested in research and an average of $452 per trip when they book via an agent.  The niches which have shown an increase in the use of a travel agent include:

Millennials

34% of Millennials use travel agents today, with 39% claiming that they plan to use an agent in the next two years.  With their propensity towards enjoying memorable life experiences, 60% of Millennials are willing to pay more for a travel agent’s knowledge of destinations, and 83% claim they choose to use an agent because of this expertise. 

Corporate travelers

Agents provide the support businesses need, not only for booking a trip, but for handling last-minute changes when required or when disaster strikes.  When considering the reduction of time spent on planning and the elimination of the hassle, corporations have good reason to prefer agents for the travel planning.  As such, it is not surprising that when a company has 25-50 employees or more, and spends $50,000-$100,000 on airfare annually, they often use an agent.

Luxury travelers

These travelers want to maximize their experience, with minimum effort from their side.  They do not want to spend their time researching destinations and building itineraries.  Travel agents, with their in-depth knowledge of the local venues and attractions, can provide this demographic with a customized trip.  What’s more, the relationships agents have cultivated with hotels and other vendors, can lead to perks, which are available only to agents.  Some of these perks can be worth up to $1,000 per trip.

By recognizing the potential of these relevant market niches, and customizing marketing and services to their needs, travel agents can take advantage of their competitive edge over OTAs.

Offer seamless payment options

It is important to recognize that OTAs have succeeded for a reason.  They answer today’s need for immediate gratification.  They offer a seamless process for travel research, booking and payment.  The chances these sites would have succeeded as they have, if travelers had to physically bring in a check for payment, or send it by mail, are slim.

Travel agents must adapt their payment methods to include mobile and online payment platforms.  By providing a seamless payment process to their customers, agents improve their customers’ experience and satisfaction, leading to more repeat business.  Agents can use mobile payments to increase loyalty and security, delivering an end-to-end trusted process.

Extend your reach

One of the leading reasons for using an agent is that a professional has in-depth knowledge of destinations.  Travel agents can further expand their knowledge by partnering with other industry players and international agents, to gain access in key destinations, strengthening their service offering. 

These relationships can be mutually beneficial, as partners share customers with each other when relevant, enjoying a referral commission, and growing their customer bases for specific locations.  There is strength in numbers, and independent agents should foster relationships which improve their reach and customer base. With over 42% of Americans planning to take vacations in 2017, and with many popular destinations located internationally, now is the time to partner, build your own travel service network, increase the breadth of locations in which you collectively provide service, and extend your reach.

Join OTA affiliate programs – yes or no?

Travel agents can adopt an “if you can’t beat ‘em, join ‘em” strategy, which can serve to drive traffic to their websites, and increase revenues.  OTA affiliate programs pay a commission on the commission they receive from hotels and airlines.  So, if Booking.com takes a 30% commission from hospitality players, and pays a 25% commission to affiliate travel agents, the travel agent will ultimately receive 7.5% of the booking itself.  Other affiliate programs pay a pay-per-click royalty, while others combine these commissions. 

That sounds promising, but at some point however, travel agents must ask themselves if the additional income from these royalties is worth the price.  By using affiliate sites agents are weakening their own brand, and essentially exposing their clientele to OTAs, their number one competitor.  What’s more, as OTAs have limitations in the level of customization and support they can provide travelers, using them as a point of supply could actually harm your hard-earned reputation, and all for comparatively low revenues.

Travel agents can receive access to airline and hotel supply via a GDS (Global Distribution System), and can even integrate online booking capabilities, on their own sites, via these systems. By integrating GDS software and online payment platforms, agents can offer the convenience of OTAs while taking advantage of their competitive edge in personalization and customization, and effectively compete with OTAs. 

Want to learn more about how your travel agency can survive in the OTA era? Download our free ebook, "The Travel Agent's Guide to Surviving in the OTA Era".

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