This year's Travel Industry Survey found that the agencies that reported a gain in revenue in 2014 focused on higher commissions and high-margin products and hired more staff, or made no changes. Those that saw declining revenue in 2014 were more likely to have cut marketing, reduced staff hours, reduced operating hours and cut staff or salaries. The survey also found that 11% of those losing retail agents dropped consortia or franchises. Travel Weekly contributor Jeri Clausing spoke with Libbie Rice, co-president of Ensemble Travel Group, about these findings.
Q: Are you seeing these same trends with your agencies? Are high-margin products the key to success?
A: I wouldn't say it is the be-all and end-all, but time is money, and we are seeing an uptick in luxury. So obviously, focusing on the products that make you the most money is important. And you shouldn't spend hours on low-margin products. But you want to holistically think about your clients, make sure you are thinking about things like air, transfers and the small things. Those are things that keep clients loyal to you.
Libbie Rice
Q: In order to tap into the high-yield products, do you recommend that agents pick areas in which to specialize?
A: Yes, we definitely recommend that people specialize, pick a lane and decide who they are. You can't be everything in the marketplace. Pick a lane where you want to focus in terms of products, groups, something that makes you step out from the others and something you are comfortable selling. Then marry the two.
Other areas we see money in, from a trending standpoint, are places where the agent really adds value, putting all the components together. The high-end, FIT traveler, for instance, is looking for things that can't be shopped on the Internet. The agents are adding value that somebody who doesn't have down time doesn't want to put together on their own.
Also, crisis management, when someone's flight is canceled; obviously there is value in that.
Another area we are seeing a big uptake in, across the board, is experiential travel. People want to see diverse cultures. Obviously, an agency can bring a lot of value. We have 85 on-location experts around the world. They are doing the groundwork in that country and can help create a lot of that.
Q: What about the findings that the agencies that saw increased revenue added staff and upped marketing while those that lost revenue cut in those areas? Do you think that is the case or is that more of a chicken-and-egg situation?
A: The knee-jerk reaction is to cut marketing when things are not going well. It has a longer payoff. It's the same sort of equation on the staff side. But I'm not necessarily privy to everyone's staffing levels.
Q: How important is marketing?
A: I think it is incredibly important for both lead generation, bringing new clients on and then on the retention side. We know that customers are not extremely loyal, so you need to be top of mind, remind them that you are there and that you have access to things that they might not find elsewhere in terms of promotions and products and a variety of ways to do things.
Q: Marketing is complicated these days. What are the most valuable marketing tools? Traditional media, social media, advertising?
A: A combination of them all. It's more about touch points in a variety of different ways. So having a Facebook page that you don't update regularly is not effective. Over-emailing isn't effective. Being able to segment your customers on how they want to be communicated to is important.
Q: The index shows that international travel sales are on the rise. Is this an area that is really booming?
A: Yes, especially Europe because of the [weak] euro. We are even seeing this among our Canadian members who find the U.S. dollar too high. Europe is a little more palatable, and I think the currency is probably helping to drive some of that.
Q: What are some of the biggest challenges your agencies are facing?
A: There is a lot of consolidation going on in the industry. If you don't want to be acquired, there are a lot of [big] players around you.
Libbie Rice is co-president of Ensemble Travel Group. An incorrect spelling of her name appeared in a previous version.