Asian travel agents are reacting to changes in technology and rising costs coupled with an increasingly demanding travelling public.
Research revealed that travel agents needed to adapt and re-focus their businesses if they were to survive in the new travel climate, according to research by Cendant Travel Distribution Services.
Also revealed was the widespread uncertainty on whether travel agents were able to provide the best price for travel, with 54 per cent of travellers in Hong Kong and 40 per cent in Malaysia unsure about the price competitiveness between traditional agents and fares available online.
However, only 37 per cent of Malaysians found that making online bookings was inconvenient compared with 48 per cent of those in Hong Kong who still required assistance from agents to make travel arrangements.
The research was gathered between December 2004 to May 2005 from 55 leading agencies in Asia, and found that most Hong Kong and Malaysian consumers found travel agents to be extremely efficient, although would not commit to using agents in the future with more than 50 per cent of Malaysians remaining undecided.
“Our research shows that the role of travel agents is changing from one of pure distribution to advice and consultancy,” Executive Director, Marketshare, Anthony Venus said.
“The experience in the US and EU should serve as an early warning signal for the industry in Asia. Players in the market need to continue to be responsive and evolve with the changing market environment.”
The biggest gain for travel agents were that consumers found there was widespread uncertainty about the security and transactional capabilities of internet booking sites.
The survey found that 46 per cent of respondents were uncomfortable leaving their credit card details online, 59 per cent were unsure whether they can book travel packages online; 65 per cent were uncertain as to whether they can get instant confirmation on their travel bookings; 62 per cent were unsure whether they can make waitlist bookings online; and 59 per cent were unsure of the online capabilities of making multiple bookings.
The findings indicate that while travel agents business remains secure for the moment, marketing efforts by online companies to educate customers could tip the market toward using the internet for bookings.
“As low cost carriers make air travel more affordable, consumers have grown increasingly demanding and highly price sensitive, with low fares often negating any sense of loyalty, unless that loyalty is based upon personalized or niche customer service,” the report said.
“One of the major issues is the reduction or removal of commission from airlines to travel agents - travel agents in Asia can look to Singapore, where commissions have been cut to 0%. This is forcing the travel industry to review revenue structures and consider what other revenue opportunities are available to them, for example, service fees or selling content where commissions are still available, such as hotels and destination services.”
The report provided advice for agents, saying they needed to choose the ‘right partner’ to have access to content which would inevitably decide the difference between being competitive or not.
“This partner must also be able to provide agents with the technology to improve efficiencies and deliver the content to their customers in the way they want. It is this fusion of content and technology which will define the future success of travel agencies.”
“These findings imply that the days of travel agents solely selling air tickets as a means of survival are numbered,” Managing Director-Asia, Cendant Travel Distribution Services, Mark Rizzuto said.
“Differentiation and product diversification will play a big role in the future of the travel distribution industry. Personalized customer service, specialist travel packages as well as exclusive packages with partners will be advantageous in helping travel agent differentiate their product offerings in the future.”
“With so many factors influencing the industry, travel agents must consider the GDS partner that can deliver the technology solutions and content to ensure their future survival. At Cendant TDS, we are much more than just a technology supplier. Through our varied subsidiaries across the world, we can provide innovative new channels and content for our travel partners to access package components that help them adapt their business model in the face of these rapid industry changes,” Mr. Rizzuto said.
This survey is a second of a series commissioned by Cendant TDS to examine trends in the Asian travel industry; the first was released in July 2005 and detailed the impact of low cost airlines.