ho needs travel agents?" The headline
on the lead story on the front page of the business section of the
Newark Star-Ledger on March 22 was intended to be provocative.
The subhead, just below, read: "The airlines don't. The online
crowd may not -- but 70% of tickets are still bought through
The article quoted people who no longer use traditional agents
but also devoted several inches to travelers who swear by them.
Nowhere, however, did the article address its headline question
comprehensively. Who needs travel agents? Seventy percent of the
traveling public, yes. But just as importantly, non-air suppliers
depend upon and plan to continue to support travel agents.
When it comes to travel distribution, traditional travel agents
are still the whales, and all other methods collectively amount to
a school of goldfish.
To every segment of the supplier community, travel agents
represent billions of dollars of revenue. According to the last
Travel Weekly U.S. Travel Agency Survey, travel agents were
responsible for $26.5 billion of revenue for the cruise lines. They
booked $16.4 billion on behalf of hotels, took reservations
representing $11.4 billion for car rental companies and produced
another $11.9 billion for tour operators, travel insurance
companies and miscellaneous other travel suppliers.
That's commissionable income. But travel agents produced
significantly more revenue than that for suppliers.
For instance, once on board a ship, passengers continue to
contribute money to a cruise line's coffers. Every shore excursion
dollar, every cent spent in a spa or put in slot machines, or spent
in a ship's store -- all of it adds to a cruise line's profits, and
the overwhelming majority is spent by passengers brought aboard by
Hotels represent another segment that profits more from travel
agency sales than their commission payouts suggest. Restaurants,
room service, gift shops, lounges and health clubs are
commission-free profit centers for the hospitality industry.
I'm not suggesting, incidentally, that agents should begrudge
suppliers this commission-free revenue. Travel agents need healthy
suppliers just as suppliers need healthy travel agents. The
economics of a hotel or cruise line requires that this incremental
income strengthen the profit side of their P&L.
And suppliers must bear costs in addition to commissions to work
with travel agents, such as GDS fees, trade show participation,
maintenance of sales forces that call on travel agencies, direct
marketing to travel agents, etc.
The question that both travel agents and suppliers should be
asking themselves now that airlines are out of the equation is: How
can I deepen the agent-supplier relationship? Suppliers will seek
out sophisticated agents who combine database technology with their
one-to-one client relationships to produce extraordinary results.
Agents will seek out suppliers who will reward them well for
extending their client relationships, relationships built on
If you want to participate in these new relationships between
agents and suppliers, incidentally, you'll want to sign up for the
Travel Weekly Conference May 20 to 22. You'll
walk away with the tools to prosper in the new zero-base commission
Brick-and-mortar agents believe in a bright future. Travel
Weekly's Web site, TWcrossroads.com, featured a poll the week after
zero-base commissions were announced, and a resounding 97% of
participating agencies responded that they have no intention of
closing up shop. The airlines may have shut the door on agents, but
agents have plenty of doors open to the customers and suppliers who
need and value them.