Online bookings have provided travel agents with an enormous challenge.
Between the global financial crisis and the market dominance of two major holding companies, the landscape for travel agents has changed markedly in recent times. But one development has altered the sector more than any other – the internet.
Websites such as wotif.com, webjet.com and lastminute.com have altered the way end users interact with suppliers. In turn, this has changed the way each link in the chain models its business.
Wholesale travel agency Wildlife Safari’s chief executive, Trevor Fernandes, believes everybody “knew their place in the pecking order” until the internet came along.
“That has completely changed everything and turned everything on its head, as it has in many other industries,” Mr Fernandes told WA Business News.
“All of a sudden your end supplier, the guy at the other end of the food chain, has the ability with very little cost to expose his product and sell his product to the guy at the other end of the food chain, which is the end traveller, for very little money, little experience, little time, little effort – all he has to do is battle through Google.”
Mr Fernandes said clients were now accessing end suppliers, and retail agents bypassing the tour operators and going directly to the destination management company.
“It would be almost like the plankton turning around and eating the whale; it is complete chaos,” he said.
Multinationals Flight Centre and Jetset Travel World Group have also recognised the opportunity that lies in web sales, with many end users now out to save money by booking their own holidays.
At the time of its merger proposal to Stella Travel Services last June, Jetset Travel World Group said it was engaging in the discussions “in light of the changing dynamics of the industry”, and that the merger would result in increased online offerings.
In Flight Centre’s 2009-10 full-year results report, the company said its website was launched in 2009-10 to operate as a transactional site alongside the Liberty site (the US retail agency Flight Centre purchased pre GFC) in order to extend the product range of Flight Centre.
The company also launched Flight Centre branded but non-transactional sites in China, Hong Kong, Singapore and Dubai to capitalise on what it said was its global brand strength.
Online flight sales business Bestflights.com seems like a wholesaler dealing directly with airlines to get access to flight specials, but the end user can access and purchase flights through its website – an example of how supply chain linkages have been blurred.
Further evidence of the appeal of online travel is provided by search engine giant Google’s recent moves to buy ITA Software, a flight data company that specialises in organising airline data, flight times, availability and prices.
With leading global travel sites such as Expedia and TripAdvisor using ITA Software, there have been concerns the purchase will give Google an unfair advantage.
But it’s not just about cheap flights. The REA Group (which owns realestate.com.au) recently sold its holiday rental site realholidays.com to Texas-based HomeAway Inc.
So with huge multinationals taking end users straight to the end suppliers, the question is how can the local independents compete with Google?
For independent retail travel agency Motive Travel’s founding chief executive, George Michalczyk, it comes down to quality of service.
Generating an understanding that “without a travel agent, you’re on your own” has been imperative to the business’s survival, according to Mr Michalczyk.
He said after major world events like the Icelandic volcano, which caused airline chaos on a global scale, travellers have recognised the benefits and flexibility travel agents offer for rebooking flights – something that isn’t possible for the average internet user booking their own.
“Our battle with internet popularity is, if you do have a problem with any bookings, you do have an issue trying to change any bookings you have made online,” Mr Michalczyk said.
“Things like that play nicely into the hands of travel agents.”
Motive Travel became a member under the Travelscene American Express brand a few years ago in order to strengthen its online positioning and Mr Michalczyk, who has been in the industry for 35 years, has also moved to diversify the business’s market.
The business is now 50 per cent leisure, 50 per cent travel but specialises in inbound cruise and sport and event travel services for those two market segments.
According to Mr Fernandes, placing value on an agent’s time and competing with quality products and service are the most important elements to the independents remaining competitive.
“A good agent will always survive, like anything, a good restaurant will always survive,” he said.
He said adapting to the changing ways of the industry had become necessary for survival.
“Yes it is disruptive, but that is what a lot of agencies are finding.”
Mr Fernandes said Wildlife Safari closed its San Francisco Bay office a year ago, recognising the company could service that market from Perth.
“We are making this office our global reservation office so we can process anything from anywhere here, which, with email and technology, is easy to do,” he said.
