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Expanded Tour Sales Needed For Industry Recovery

July 24, 2009 By: George Dooley

The current decline in travel demand— corporate and leisure— presents the travel industry with one of its toughest challenges, Robert Brennan, the now retired founder of Brennan Vacations and former president of the National Tour Association (NTA) said an interview with Travel Agent.

“Tour operators are between a rock and a hard place as are destinations, hoteliers and suppliers," Brennan said. "Most are cutting costs to the bone and working constructively with their partners to deliver outstanding deals that will attract more travelers. But its going to be tough.”

Brennan, a 40-year veteran of the industry who built Brennan Vacations into a $18 million operation, predicts a protracted battle for consumer discretionary spending and higher marketing costs to “acquire” new customers. “The travel industry has to communicate aggressively the value of travel and its affordability,” he said.

A strong travel agent advocate, Brennan cites the recent study on the packed travel market by PhoCusWright for ASTA (with the support of the USTOA and NTA) as a pioneering effort to define the industry and agents roles. The total tour market is estimated at $18 billion with about 69 percent of tour sales by agents— or an estimated $8.4 billion.

“This represent a tremendous opportunity for all agents –including the home based independents and host agencies,” Brennan said. “If the agents don’t respond the online agencies share of the market and tour operators direct to consume sales will increase. Tour operator and agents are intermediaries that must demonstrate value.”

The problems faced by the industry are compounded by the lack of consensus on how long or deep the current recession will last, the uncertainty over federal tax policies on small businesses, the effects of ‘cap and trade’ and heath care legislation. “Families will face real pressures and the industry must convince them that travel is a good investment,” Brennan said.

Brennan served on the NTA’s Board and on various national marketing, government relations and planning committees. Globus acquired Brennan Vacations in 2003. He also created Canada a La Carte, a Brennan unit. Brennan Vacations is now owned by EGS Corp. Brennan is also a Certified Tour Professional (CTP).

“The current crisis is worse than the post 9/11/2001 downturn and no one is sure when it will end – 2009? 20010? 2011?," he asked. "The longer it lasts the greater the impact and the greater the pressure on smaller companies. Consolidation and downsizing seems inevitable and  I don’t see a quick fix.”

A staunch advocate of close working relationships between tour operators and travel agents, Brennan says the current downturn has increased the value of travel agents to tour operators and the travel industry. This includes the home-based independent agents.

“Travel agents have always been important to tour operators and to the industry," Brennan said. "But agents – including home-based agents - are even more important now in the downturn. They are closest to the customer and grasp and meet client needs. They provide sales but also market intelligence vital to suppliers and destinations.”

Despite this, the competition from online players will continue and travel agents and tour operators will have to find ways to meet the challenge, Brennan notes. Niche travel opportunities abound including family travel. “Continued education and training of agents in tour sales whether escorted, FITs or packaged tours is essential – it should match what is being done by CLIA,” he said.

The major associations— ASTA, U.S. Travel (formerly TIA), NTA and USTOA— are doing a good job in tough times, but Brennan believes more can be done. “More cooperation and communications may help," he said. "U.S. Travel’s efforts to get pro-travel legislation through Congress is welcome. But there is a residual fear of media criticism by corporations who plan conventions, meetings and incentive travel. Relations with Congress and various government agencies will also be more important – and costly to maintain.”

State and local destination marketing organizations also face challenges as they compete for traveler’s dollars. “Promotional budgets may have to increase and new tour packages designed to attract vacationers – including niches markets,” Brennan said. In a global market, Brennan is also concerned with shortfalls in inbound travel, the value of the dollar and passport and visa restrictions that could inhibit growth.

People will be traveling closer to home, Brennan predicts. “Domestic, U.S., Canadian and Mexican destinations may be in a better position than international destinations," he said. "National parks are popular. Inbound travel demand also bears watching. But business as usual won’t cut it if the recession continues. In my view business confidence is very shaky inhibiting expansion, hiring and investment in the future. What will turn it around is the application of the tremendous talents and energy of agents, tour operators and destinations. The travel industry is tough, resilient and includes many of  the best marketing talents in the world – resources we can build a  dynamic and profitable future on.”

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