5 Reasons why Tour Operator and Travel Agent Business is Growing

cambodia vietnam resort

Vietnam and Cambodia are New Destinations

It is easy to see the internet giants in hotel reservations – Agoda, Booking.com, Expedia and many more – as the future of travel with traditional channels (travel agents’ reservations through GDS and tour operators) as a part of history that hotels and resorts no longer need to think about.  After all, these web sites make booking so easy and hotels and resorts see significant volumes coming through these them.  If you see little coming from the tour operators and travel agents, you might assume that this is because their volumes are dying.

The evidence is to the contrary.  UK tour operators, who have exploited the opportunities the internet offers, are reporting rising sales and revenues.  In the third quarter of 2013, TUI (owners of Thomson, First Choice and more) reported profits up 18% with 84% of their Summer programme sold out.  For the same period, the UK’s oldest travel agent, Thomas Cook, which had been in great difficulties, reported a return to profit in the Third Quarter – a major turnaround from near bankruptcy a year before.

GDS reservations are an indicator of the activity of travel agents globally and a recent article in Hotelmarketing.com showed GDS volumes increasing year on year by 5.5% in July 2013 – based on stronger corporate and leisure demand.  At the same time, articles on Time.com, Forbes and Tnooz all reported the resurgence of travel agents in North America, which normally sets the trend for the U.K. and Europe.

Why are tour operators and travel agents surging ahead and defying what seemed like the trend to book everything online ?

  1. Tour operators have embraced the internet and, essentially, make their brochure bookable online direct with them, as Thomson’s UK site shows.  Those proportion of clients who do book direct with them, of course help them to avoid commission to travel agents, which contributes to increased profits.  The fact that they and other majors, such as Thomas Cook have embraced the technology, keeps them relevant and enables them to build new destinations.
  2. Whilst many in the UK and Europe stick to traditional destinations, mostly within Europe, there is a rapid growth in travel to new destinations.  New destinations give opportunities to niche tour operators and niche travel agents.  U.K. tourist numbers to Vietnam rose dramatically in 2012 and 2013.  Cambodia saw an increase of 19.00% in the first part of 2013 whilst the Philippines experienced 19.95% more from France alone. Statistics from the UK’s biggest foreign currency provider showed sales of the Vietnamese Dong rising 68% from 2011 to 2012 and a further 106% from 2012 to 2013.  Wanderlust Travel Magazine‘s Travel Awards 2013 listed Vietnam and Cambodia high in several categories with both Hoi An, Vietnam and Siem Reap, Cambodia in the top 10 “Top City” category.
  3. The OTA’s – Agoda, Booking.com and so on – may be fine for booking a well known destination, but discovering a new destination needs the help of an expert and a web site just doesn’t serve the purpose.  Such trips involve a lot of investment and a tourist doesn’t want to arrive at their hotel or resort only to find that they would have been better staying at another resort, where the beach is better, the view more stunning and the rates the same or lower.  A travel agent can provide that advice.
  4. As many of the posts I linked to mentioned, the amount of information on the internet has become so vast that someone sitting at home, planning a holiday, can easily be overcome.  They need someone, who has knowledge and experience of the country in question, to provide advice and they appreciate the full, one-stop service where they can not only book their holiday but also get advice on immunisations and help with visas.
  5. With many in the UK and Europe booking their Summer holiday as early as January or February, there is no urgency to get everything arranged at the click of a mouse.  Tomorrow, or even next week, is fine if it means they get the trip of a lifetime with no worries en route.  This factor of the growing importance of customer service and the elimination of worry when travelling has come into the spotlight recently in the UK with Ryanair’s infamous Chief Executive, Michael O’Leary promising to end an “abrupt culture” after a profits warning and shareholders concerns about lost sales.

In a post about Market Segmentation in our Revenue Management series, we highlighted this very important aspect of a revenue or hotel manager fully understanding his or her business.  Excessive reliance on any one channel or type of channel is rarely healthy, especially if those channels are not achieving 100% occupancies for you.  The same tourism figures for Cambodia, for example, indicate average occupancies of around 68%.  If working with a range of UK and European tour operators, in addition to existing business from OTA’s, would supplement your current business and get it closer to the ideal level, with a high proportion of the additional revenue going to your bottom line because of the limited number of variable costs, it has to be worth taking that step.  We will expand on this theme in a blog post later this week, because it goes to the heart of how some hoteliers around the world think and act – please look out for that.

What’s your view ?  Do you see tour operators and travel agents in the UK and Europe and a continuing and, maybe, rising source of business ?  Please add your comments below.

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3 thoughts on “5 Reasons why Tour Operator and Travel Agent Business is Growing

  1. Pingback: Build it and they will come.. Or will they ? | Smart Ideas for Serviced Apartments and Hotels

  2. Pingback: Niche Marketing for hotels and resorts in an Online World | Smart Ideas for Serviced Apartments and Hotels

  3. Pingback: SmartOtels and Supranational form International Partnership | Smart Ideas for Serviced Apartments and Hotels

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