ASTA: Number of profitable agencies surpasses pre-recession levels

ASTA: Number of profitable agencies surpasses pre-recession levels

The number of agencies that made a profit in 2011 (55%) has surpassed 2007 levels, when 53 percent reported a profit, indicating continued—albeit slower than anticipated—economic growth, ASTA’s 2012 Agency Profile Study found.

The study also found that the number of agencies with sales of less than $1 million (39%) and sales of more than $10 million (9%) grew in 2011, up respectively from 2002 by 93 percent and 100 percent. Agencies in the $1 million to $10 million range did not fare as well, experiencing sales decreases anywhere from 21 percent to 56 percent.

“As the economy makes solid gains, we are seeing both large and small agencies experience revenue growth. It’s fully expected that when the economy begins to grow in earnest, the same will hold true for mid-sized agencies,” said ASTA CEO Tony Gonchar. “This report provides an in-depth look at the health of the travel agency industry, as well as critical benchmarking data which will help all agency owners optimize their business operations.”

Interestingly, the crackdown on the use of independent contractors (ICs) by the Internal Revenue Service and state regulatory bodies may be having an effect on travel agencies as the average number of ICs (8) and part-time employees (2) have dropped since 2009 as the number of full-time (12) employees began to rise.

Other data of note include:

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*  When comparing international to domestic sales as part of an agency’s sales mix, the percentage share of international travel sales has increased over the last seven years, up from 40 percent in 2004 to 56 percent today. Beginning in 2010, agencies now expect international sales to outstrip domestic sales.

*  Between 2002 and 2012, the percentage share of air sales (24%) dropped 29 percent.  Car rental (4%) also saw a large decrease (18%) in percentage share during the same time period. In contrast, hotels (11%), cruises (26%) and tours (31%) all saw strong increases in percentage share of 32 percent, 18 percent and 11 percent, respectively.

*  Half of business communications with clients is conducted by phone (52%), while a third is carried out online (33%).  A fifth of business communications is still done face-to-face (19%). Compared to 2003, phone communications is down by 30 percent, while online communications has grown by 246 percent. The number of walk-ins/face-to-face appointments has barely changed.

*  Retail locations with multiple employees (35%) still make up the largest percentage of agencies, although this figure is down slightly from 2011 (37%).

*  Comparing 2003 with 2012, the percentage of home-based agencies grew by 409 percent.