Good research, said Stan Plog, tells a story. And Plog, who has been conducting surveys and analyzing travel trends since the mid-1960s, perceives a clear plot line in the research he conducted in August for our Travel Industry Survey, a special pull-out section in today's issue.
"When you see a strong, consistent narrative that continues to develop over time, that's especially reassuring; you know there's no problem with the sampling," he told me. "There is a main story line, a powerful narrative right now, and it says that agencies have been managing their businesses to be less and less influenced by things that are beyond their control."
The survey data reflect a parallel real-life narrative with no shortage of drama. Airlines, which are beyond the control of everyone in the travel industry, were, in the not-too-distant past, the dominant source of commission revenue for most agents.
But starting 13 years ago, when airlines first capped commissions, and building until 2002, when they finally eliminated base commissions altogether, the carriers were perceived as thumbing their noses at agents with increasing vigor. So a subplot in this year's survey, told in brightly colored charts and graphs, is the story of agents thumbing their noses right back.
Air bookings as a percentage of overall agency revenue has declined for the fifth straight year. It's now down to 25%. But this particular motif weaves its way throughout the study. Only 22% of agents surveyed said they expected airline sales to increase in 2009, and airlines didn't even make the list of products agents said they planned to focus on. Airline sales now are a lower priority than perennial also-rans like selling timeshares and condo rentals.
This might make airlines seem like villains getting their due in a tale of revenge, but the primary narrative is more upbeat. It describes a profession methodically taking control of its destiny and becoming more self-reliant. It is a coming-of-age tale, outlined, Plog said, by a dramatic movement toward selling high-commission products and services.
A full 72% of agencies cited cruises as a product they will focus on, and it was mentioned far more often than any other product group. Even among the largest brick-and-mortar agencies, which typically handle a high proportion of corporate business, 52% indicated they would be focusing on cruises. Given the cruise emphasis and the trend toward taking control, it will be interesting to monitor evolving agency reaction to the growing number of noncommissionable fees cruise lines are adding.
After cruises, agents named packages, tours, family travel and resorts/spas, in that order, as areas of high interest, a ranking that is identical to last year's top five.
Further evidence of agents pursuing high commissions is seen in a graph showing that sales of international travel had been trending up. This year it held steady rather than rise, but Plog notes that in a year when the dollar has been weak and capacity on transatlantic routes has been tight, a one-year flat line does not reflect lack of interest in this lucrative business.
"There were people who were ready to write off travel agents," he said. "But travel agents are showing that they're a lot more sophisticated than they were given credit for. They clearly set out to master their own businesses, and they are succeeding."
He sees another strong subplot in the data: the move toward agency consolidation. Stand-alone agencies are still the majority, but just barely, at 52%, down from 54% last year. Multisite chains, on the other hand, are on the rise. This trend is also reflected in agency sales volume. Agencies under $2 million accounted for 49% of the total in 2006, 47% last year and 44% this year. Agencies with sales of more than $10 million are now 22% of the total, up from 19% in 2006.
The final piece of the subplot can be seen in the average number of years an agency has been in business. More than 56% of agencies have been in business more than 20 years, up from 52% a year ago. The average age of an agency is now 26.6 years, up from 25.2. That reflects both fewer startups and more consolidation of long-established agencies with younger, smaller ones.
Plog sees consolidation as a positive development, particularly given the current economy. "Larger, strong agencies will be in a better position to weather an economic storm," he said.
Plog called the current economic crisis "a bigger, deeper cut than anyone has experienced." But he also noted: "Historically, travel is one of the best indicators to show when the economy is going to pick up. People will delay traveling when times are tough, but then they get cabin fever ... and conclude that though things may not be getting better, it's time to take a trip anyway. This usually occurs six to nine months after things hit the economy. It's not a deluge at first but builds steadily. The current situation is very bad, so it may need to reach the full nine-month level before things begin to turn. But it will turn."
Plog at one time built a large research firm, then sold it about 10 years ago, thinking he would retire. "It turns out I can't retire," he said. "I don't like cutting roses."
In addition to returning to research, he has launched a fascinating new website, Besttripchoices.com, which includes a "travel personality quiz" that agents can use to suss out what destinations and travel styles suit clients. He wants to add a component that will enable consumers to hook up with agents who will also match their travel personality type. (If you're interested in being listed in his agent directory, go to: Besttripchoices.com/agent/agentregistration.php.)
Having known Plog for about 15 years now, I've noticed a consistency in his thought process, beginning in his days in research and moving into his Web effort: He always thinks in story lines. Industry research gives him the plot. And in tracking travelers' personalities and hooking them up with travel agents, he can bring the plot to life with characters.
Contact Arnie Weissmann at [email protected].