Arnie Weissmann
"When you've been down in the sewer for a while, the gutter begins to look pretty good."
That memorable line was spoken to me by a cruise executive in June 2010, about a year and half into the recession, when it seemed that every inch forward and upward took enormous effort.
In the first Travel Weekly Travel Industry Survey fielded after the recession hit a decade ago, 80% of the respondents reported a decrease in total sales. This year? Only 8%. As Sarah Feldberg reports in this year's survey, travel retailers appear to have fully escaped the dark star gravitational pull of an economic implosion.
It may be hard to remember all the details of those difficult times, but travel advisers who were there, and this year's survey indicates that 82% have been in business for 10 years or more, appear to have held fast to the lessons that lifted them from the sewer to the Skydeck. In fact, most now appear to have their sights set on the top floor of the Burj Khalifa, the world's tallest building, and only 3% of all respondents predict that when all is said and done, sales will decrease in 2018.
What were those lessons that, for instance, raised median gross bookings for home-based advisers (both independents and satellites of larger agencies) 56% between 2008 and 2018, from $181,000 to $283,000?
We can find some clues in long-term trends. Air sales are down from 24% of gross bookings at the beginning of the recession to 16% in the current survey. While commissions on air sales have become more widely available to retailers over the past few years, they are relatively lower than commissions on other products, and a full 75% of all advisers say they do not have access to any air commissions or overrides.
Interestingly, air sales have fallen despite the steady improvement in the sales of international travel, which rose from 49% of all tickets sold in 2008 to 62% this year. Part of that could be attributed to the increase in the availability of low-cost transatlantic fares, but the downward trend in air sales precedes the proliferation of low-cost carriers.
In short, successful advisers appear to be laser-focused on higher margin business. In fact, when we asked agents what actions they took in response to business conditions in 2017, the biggest gap in response between traditional agents who made money and those who lost money last year was determined by whether they increased their emphasis on products that have higher margins. Among those who saw business rise, 19% said they had done so. Among those who saw business decrease, only 3% pursued that course of action (see Page T12).
The expansion of the U.S. economy has now lasted longer than any previous time, and travel, as an industrial vertical, has outperformed global gross domestic product for several years running.
It has been observed that when times are good, everybody's a business genius.
But there's also ample evidence in our numbers that positive general trends have been amplified by agency resilience and entrepreneurial zeal. Agents are flying high and are not, it would seem, susceptible to vertigo.