In this year's Travel Industry Survey, 31% of advisors reported that internet-based competition had a negative impact on business in 2018, second only to security and safety (42%). Last year, internet-based competition was the No. 1 concern, with 42% reporting that it had impacted 2017 revenue. Senior editor Jamie Biesiada spoke with Signature Travel Network president and CEO Alex Sharpe about why advisors seem less concerned about the OTAs.
Q: The negative effects of internet-based competition appear to have lessened from 2017 to 2018. Does that indicate advisors are feeling more confident in their value proposition?
A: I think that's a big factor in it. Certainly, we're trying to give them some level footing in that space by providing members with hotel and cruise booking engines that members can offer to consumers to shop rates and availability online.
But it's not necessarily to compete in the online space; it's to compete in the online research space so people can look at pricing and availability and dig in, giving them those tools where they can stand up next to big OTAs or even the suppliers themselves with rich content and the ability to book, if necessary, or just kind of dig in more. I think that's part of it.
I don't think the threat is any less. I think we've met it, but the difference is, people talk about supplier-direct. I think when you look back 15 years ago I'll use my experience on the supplier side [as a senior vice president at Regent Seven Seas Cruises before joining Signature in 2011] we weren't as sophisticated as a lot of the travel agencies.
Now these suppliers are cutting edge. They're hiring people who are doing artificial intelligence. They have teams of social media. They've become really, really good, but I also think over the years they've matured in understanding where they can add incremental value and where they can just stay out of the agency's way and let them still do what they do well.
Q: Do you think advisors are getting better at communicating their value to suppliers?
A: Yeah, we're certainly getting better at it from the supplier side. We're more dynamic, looking for different solutions. We hired an analyst this year, the idea being if we can dig in and find opportunities and present them to suppliers, nine times out of 10 they say, "Yes, we'll do that." But if we wait for them to come up with the creative idea to work with our network or to work with a particular agency, they're overwhelmed, and they don't get there. They're spending their time and energy figuring out the next promotion or the next direct promotion, so we need to be out there.
Q: How are agencies doing with communicating their value to consumers?
A: I do think they're doing a better job delivering the value proposition message to the consumer. More and more of our members are charging fees every day. I hear things like, "Oh my gosh, I was so scared to charge fees. Now I charge them, and people are saying, 'Oh, is that it?'" They're seeing the value, because if you aren't charging, there isn't value. If you're an attorney and you said, "Well, I'll do this for free," You'd say, "Oh gosh, maybe he's not a very good attorney."
Over the past few years, the Travel Industry Survey indicates, travel advisors have shied away from charging service fees. See this Industry Survey report here.
Q: How would you describe a travel advisor's value proposition?
A: A navigator, a time-saver, someone who can decipher all of this information. We all got scared to death of the internet because of all the stuff that's on the internet, and consumers can do their own research. But now they've just been overwhelmed by it, so they've come back to going, "OK, I don't want to read the Encyclopedia Britannica. You tell me." They're helping them navigate all that information.