Travel agency market share is highly concentrated among the industry’s top four players, according to a recent study by the research firm IbisWorld.

The study also found that while agencies will enjoy higher revenues over the next five years, the industry suffers from low profit margins.

In the report “Travel Agencies in the U.S.,” released late last month, IbisWorld estimated that in 2011, the industry’s top four players — Carlson Cos., American Express, Expedia and — accounted for better than 75% of the total market share.

The study, using data from ASTA, found that 72.7% of members had less than $3 million in annual revenue, and that the proportion of small-revenue agencies (less than $1 million a year) has increased over the last five years.

The top four industry agencies “tend to dominate the domestic and international business and holiday travel business at the national, and increasingly international, level,” IbisWorld reported. “However, there are still opportunities for smaller and niche operators at the regional and local city/town level.”

Meanwhile, IbisWorld found there has been strong growth in agencies at the other extreme, with more than $5 million in annual revenue.

“Midrange agencies [in terms of revenue] are being squeezed by both larger agencies and niche operators,” the report asserted.

Travel Retail Revenue GrowthThe report predicts that travel agencies will enjoy revenue growth, albeit at a declining rate, for at least the next five years, driven by an increase in consumer spending, which is forecast to jump another 2% this year. (Click the image, left, for a chart depicting travel retail revenue growth.)  

Adding to steady growth since 2009, the study found that total travel agency revenue is expected to grow by 8.8% this year, to $19.5 billion.

Increased travel spending over the next half-decade is expected to be the key factor pushing travel agency revenue up 3.1% at an annualized rate between now and 2017, to $22.7 billion, with revenue jumping 6.7%, to $20.7 billion, in 2013.

In the five years between now and 2017, domestic travel is forecasted to increase at an average rate of 3.3% per year, while international arrivals are set to increase at an annualized rate of 5.4%, IbisWorld found.

Those rates will be pushed by decreased unemployment and increased consumer spending, which is expected to climb 3.3% through 2017.

“Increased tourism rates will benefit travel agencies, which have struggled to survive because people canceled and delayed their trips during the recession,” the study found. “With people willing to spend more money, they will likely spend more on discretionary purchases, like trips and travel.”

However, IbisWorld found that travel agency profit margins are low, at 7.6%, “reflecting the high level of competition in the industry.”

“When travel demand weakens, many industry operators reduce commissions and margins in an attempt to retain business and cash flow,” the study asserted.

IbisWorld research found that the change has resulted in more agents charging fees for services such as preparation of a detailed travel itinerary, “where bookings may not be confirmed.”

Follow Johanna Jainchill on Twitter @jjainchilltw.


From Our Partners

From Our Partners

2022 VisitScotland Logo
Fall in Love with Scotland
Register Now
World of Luxury 12.06.21 Horizontal
World of Luxury
Read More
What's New 2022
What’s New 2022
Watch Now

JDS Travel News JDS Viewpoints JDS Africa/MI