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| How agents tackle their most threatening challenges may determine if they will thrive, survive or go under in the year ahead. |
Like every other year in the last two decades, 2011 had a healthy dose of obstacles for agents to overcome. But, it’s how you solve your company’s most threatening challenges that separate the most lucrative agents from the ones looking for a new career.
As we do every year, Travel Agent spoke to some of the industry’s leading agents, operators and other travel professionals to find out what the biggest challenges in 2011 were and how to overcome them in 2012.
The 2011 Problem: Mother Nature and Political Unrest
It is safe to say clients spent a lot of time reading travel advisories this year. Mother Nature was not kind to certain tourism hot spots while political unrest created infrastructure nightmares in others.
To name a few: The worst flooding in more than half a century occurred in Thailand in July with the death toll passing 600; three earthquakes, a tsunami and the worst nuclear disaster since Chernobyl kept tourists away from Japan this year; and Egypt recently went through one of the most influential moments in its history as demonstrators waged war on the streets against President Hosni Mubarak’s authoritarian regime.
The 2012 Solution: Ground Operators and Insurance
OK, so agents aren’t expected to solve the world’s political disasters or the global warming crisis, but there are certain precautions they can take to limit the damage to their business when people stop booking a popular destination due to a supposedly dangerous situation.
First, agents should use operators in the field to ensure that what the media is reporting is the same as what’s really going on in the country. After all, do you remember when news outlets were showing pictures of Cancun while reporting about violence in Mexico’s border cities a few years ago? Let’s just say Cancun tourism didn’t fare well despite being completely safe.
“When we look around the world, whether it be geopolitical or natural disaster, the question is how do we remain relevant,” said Scott Wiseman, president of Abercrombie & Kent USA, during a panel discussion we attended as part of Travel Agent’s coverage of the 13th annual Luxury Travel Expo. “When there is one incident in a small part of a country, we all know that it doesn’t affect the entire destination. Do you still ignore that destination? Having offices on the ground is, therefore, very important in dealing with these challenges. For example, in Egypt, we have a 430 plus-person office. We rely on them. We call them and ask if what we are seeing on CNN is the same as what they are seeing. Communication is key.”
The Consortium Solution
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| Barry Liben |
Barry Liben, CEO of Travel Leaders Group, feels that consumer confidence will remain low going into 2012, with the current feeling of uncertainty surrounding the economy. “This may be further exacerbated by sustained doubts over the future of the euro, the U.S. presidential election and the continued high levels of unemployment that are all further beleaguering that confidence,” says Liben. “Factoring in airline consolidation, reduced capacity and high load factors, continued issues with GDS, and low yields from cruising, we expect 2012 to be a challenging year for the industry.”
However, Liben says, aligning yourself with a consortium is one of the surefire ways to meet these challenges head-on. “If you’re an agency owner and still operate on your own without the advantage of a franchise or consortium, do yourself a favor and join one in 2012,” says Liben.
“Likewise, if you’re an independent agent still operating without the benefit of a host agency, do yourself a favor and align yourself with a host agency in the New Year. You’re leaving money and substantial opportunity by not belonging to such an organization. Savvy agency owners and agents understand the immense value that can be realized by participating in agency organizations in everything from enhanced commissions to effective marketing.”
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| Roger Block |
Roger Block, president of Travel Leaders Franchise Group, also addresses the number of challenges facing agents in 2012. Block believes that political instability in Europe, along with currency fluctuations over the next six months, will be among some of the top issues that agents need to overcome. The question will be, “Do you advise clients to book and prepay now at a given exchange rate, or do you advise them to wait for a possible further decline in the euro?” Block adds, “Depending upon the severity of the euro situation, the very survival of several of the weaker European airlines calls into question whether agencies should continue to book these airlines.”
Closer home, Block believes that a top challenge will be margin compression and increased costs borne by the travel agencies. “Today’s travel agencies have weathered many storms ranging from airline commission cuts to 9/11, yet the survivors also largely continue to operate in the narrowest of margins. Additional squeezes by suppliers and GDS will continue to challenge the travel agency marketplace.”
In addition, having insurance never hurts clients who want to cancel a trip last minute or leave early. It also creates more revenue for the agents.
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| Travel Insured Director of Sales and Industry Relations Isaac Cymrot says his company saw a whopping 25 percent increase in travel insurance in 2011. |
In fact, Travel Insured International, in the travel insurance industry since 1994, told us that the company has seen a whopping 25 percent increase in business from 2010 to 2011.
“I think with everything we’ve seen in recent years from volcanoes and snowstorms to civil unrest in certain countries, customers are more in tune for the need for travel insurance,” says Isaac Cymrot, Travel Insured International’s director of sales and industry relations. “And that only means higher sales and greater revenue for travel agents.”
“I don’t even know if it’s just the last year; it’s been continuous,” says Chris Russo, former ASTA president and Travel Insured International’s new national account manager. “We need to do a better job of getting the agents to get their clients covered. It’s one of those things where people always said, ‘I won’t need that,’ or ‘That won’t happen to me,’ but now we are seeing hundreds of things from snowstorms to ash clouds in Europe that are really creating a further need for insurance.”
The 2011 Problem: The Internet Never Sleeps
It may appear as though many clients are either becoming overwhelmed by Internet offerings or have been burned by a web vacation once before rushing back to storefronts to chat face-to-face with an actual human being.
But although agents have weathered the initial Internet storm, the web will always be a competitor to them simply because it never turns off.
“With the Internet available 24/7 for nearly identical fare inquiries, it’s an easy route for clients to take without consideration of the value behind having a professional work on their reservation,” says Seth Apper of New Act Travel and one of Travel Agent’s “35 Under 30” agents. “On the flip side, being expected to be available the same hours as the Internet has given me an interesting sleep schedule or lack thereof.”
The 2012 Solution: 24/7 Booking Engines and Apps
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| Larry Pimentel, president and CEO of Azamara Club Cruises, tells a general session at the Luxury Travel Expo that even affluent travelers want value for their money. |
Make your enemy your ally. If the Internet never closes, neither should you. You should use it to your advantage by allowing people to browse your agency and offerings online no matter what time it is.
“I do the best I can to set up channels for after-hours calls and ensure that I train clients on what’s an emergency, what needs attention within a couple hours, and what can wait until I’m conscious,” says Apper. “Becoming a 24/7 booking engine has been as simple as building a webpage on my new website. I have a general booking request section but also a special section for existing clients so that they can send their requests quickly and easily.”
“Personally, I don’t think it should take more than a few minutes to at least acknowledge an e-mail,” Apper continues. “This booking engine helps clients feel like their request has been received and is already being worked on.”
Operators are also doing the same, whether they are creating iPads or mobile apps.
“A major trend is solo travel,” says Wiseman. “The clients are also shopping online. They will book with you, but they still get their content online. We launched ‘The World of A&K’ for the iPad to accommodate these types of clients. They are shopping on iPads and mobile phones.”
The 2011 Problem: Rising Airplane Fuel Cost
According to the Los Angeles Times, jet fuel prices increased more than 20 percent in the first two months of 2011 alone.
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| Agent Seth Apper, pictured here in Pompei, says one of the biggest challenges facing agents in 2011 was competing with the Internet’s endless work hours. |
United Continental Holdings, one of the nation’s largest airline companies, reported losing $213 million in the first three months of the year after it paid 34 percent more for fuel than in the same period last year, according to the report, while American Airlines posted $436 million in losses.
And when airlines lose money, it comes out of your and your clients’ pockets. If fuel prices go up, so do the costs of your clients’ lengthy flights.
“Fuel cost, especially to Hawaii, was the biggest challenge we were dealing with this year,” says Greg Bernd, co-president of Classic Vacations, during the same panel at Luxury Travel Expo. “We were dealing with air fares to Hawaii that were over $1,000 from the West Coast.”
The 2012 Solution: Air Credit and Value
Flights are too pricey? See if you can find clients a good package that offers either air credit or some other added value to make the flight cost a little easier to swallow. After all, clients will pay for expensive flights if the payoff is worth it when they arrive.
“We came up with a promotion that had air credit for $500 a room,” says Bernd. “So, we added some value into the equation.”
Also, don’t dismiss affluent travelers when it comes to value. Sure, they will spend a lot for a great vacation, but it still better be worth the cost whether they have money to burn or not.
“The higher the price goes, the more an agent needs to interpret it,” says Larry Pimentel, president and CEO of Azamara Club Cruises, during a general session at Luxury Travel Expo. “Affluent travelers are very well researched. They want quality and they want value and they want someone who can interpret these things when booking a trip.”
Also, make sure you have enough destinations to fall back on when one of your biggest cash cows is suffering. People aren’t flying to Hawaii? See if they would be interested in a cheaper flight to the Caribbean.
“The biggest tip I can give you is make sure you have several products to offer, so when one product takes a hit, you have another to fall back on,” says Dan Mahar, CEO of Tauck. “People may not go to this country, but they may want to go to another destination you have offered. Innovation is key. Whatever you can do to simplify things for people, do it. There is so much beyond what you can control and so many things that you can control.”