Consumer Trends 2013: Supplier sites tops, OTAs lose ground

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2013 Consumer TrendsWhile supplier-direct websites remain the leisure traveler's preferred booking method, traditional agents are gaining a competitive advantage over online travel agencies (OTAs) in packaged and escorted tours and all-inclusive resort products, the 2013 Travel Weekly Consumer Trends Survey found. (Read more from the Consumer Trends report here.) 

Agents are booking 30% of packaged tours compared with 17% for OTAs such as Expedia, Priceline and Orbitz. The online giants are also losing ground to traditional agents in the escorted tour category, where they are booking just 1% of vacationers. That's down from 6% in the previous year's survey.

Meanwhile, traditional agents have shored up their numbers, booking 18% of escorted tours, compared with 13% last year.

Agents are also edging out the OTAs in all-inclusive resort bookings, handling 24% of those reservations vs. 22% for the big online sites.

Agents historically have performed solidly vs. the OTAs as the preferred booking choice for cruises, and that remains the case. In the survey, 34% of cruise vacationers said they are booking with an agent, while just 9% are using an OTA.

In last year's survey, OTAs booked 16% of cruises, indicating that the megasites are losing customers in that niche.

But to whom are the online giants losing business? The number of travelers booking cruises through traditional agents hasn't budged since the previous survey, when the percentage stood just where it is today, 34%.

"From my perspective, the suppliers' sites are taking that business," said Becky Powell, senior vice president of member sales at Virtuoso. "They are moving market share from some of the OTAs."

Airplane-mouseThe reason for that, she said, is that "suppliers have gotten really sophisticated with their sites. We're not seeing agents lose any cruise business, because consumers are looking for real knowledge about ships, ports and itineraries. They need to know what's good for families, what's good for couples, etc."

And, Powell added, "throw in river cruising, which is growing so fast, and people really need an adviser."

Some consumers, however, are turning to travel review sites for advice. While bookings through such sites are miniscule, 43% of survey respondents who have used the services of a traditional agent in the last 12 months said they found "good advice" on review sites. The product most often booked by consumers through sites like TripAdvisor and Yelp is a nonresort hotel.

An uphill battle

While this year's survey suggests that some gaps are closing between traditional agents and OTAs, the David-and-Goliath scenario continues to play out when it comes to supplier booking sites.

Hefty portions of reservations -- 62% in resort hotels, 51% in escorted tours and 72% in air, for example -- are booked direct, through a provider site. Traditional agents run neck and neck with supplier sites in just one product, packaged tours, with each receiving 30% of bookings. This is likely due to the logistical complications of pulling together a multi-product vacation.

The survey found that 47% of cruises are booked through supplier sites. That's up from 39% last year, but if Virtuoso's Powell is right, suppliers are taking that business mostly from the OTAs, since the survey shows that traditional agents are not losing ground in cruising.

Scott Koepf, vice president of marketing for Avoya Travel, said, "Without having gone through all the websites, but as a general statement, I believe the cruise lines are philosophically driven toward the agency channel. Are there variances within that? Absolutely. But are the lines extremely agent-friendly? Yes."

In other segments, such as hotels, Koepf said, direct bookings are higher simply due to the nature of the product. The lodging industry performs better with supplier-site reservations because the bookings often are close-in, they're short stays and are frequently booked by the drive-to market.

"To me, the questions about direct bookings are: To what extent is there a drive to get people to those sites? And how are those [suppliers] emphasizing or de-emphasizing the value of an agent? Are they driving against the agent channel, or are they simply supplementing the agent channel?" Koepf said.

The answers to those questions tend to influence the agent community's loyalty to a particular supplier, he said.

Koepf said that with supplier sites commanding the majority of bookings in eight of the nine travel products included in the survey -- all but packaged tours -- traditional agents must further hone their marketing efforts.

"We have to provide concise and specific answers to questions like: What is the reason I shouldn't book direct?" he said. "We have generic answers, good care and product knowledge, but a direct team can make those same arguments. Have the answer written down. Here's what you get if you book direct, and here's what you get if you book with me. Most of the agents out there have not quantified that, and they need to."

The future is now

Younger generations appear to pose a demographic challenge for traditional agents. Within the overall sample, 48% have used agents, and of those, 96% said they were satisfied with the experience. But of the 155 respondents between the ages of 21 and 34, only 60 (39%) have used a travel agent and only 50 (32%) expressed satisfaction with agents. Contrast those figures with the results for the 55-plus age group, in which 113 of 206 respondents (52%) have used an agent and 107 (55%) expressed satisfaction with agents.

These results might simply indicate that use of agents and satisfaction with their services tends to increase as consumers age and grow more affluent. But it could also indicate that demand for the services of traditional agents will wane as members of generations X, Y and Z evolve from their all-digital early years into all-digital middle age and remain comfortable booking their own travel.

Virtuoso's Powell said smart agents must take action now to counter that scenario.

"We have to reach out to younger people using social media," Powell said. "We have new, young advisers coming into the business, and coming into [Virtuoso]. And they are building their own travel businesses by serving younger clients."

Though the younger generations do more online, Powell predicted, "They will come to find, as the boomers have, that they don't want to take time to do all the research themselves. The travel advisers of the future are going to have to know how to get the best hotel rooms, how to get clients behind the scenes and how to provide inside information."

Among the full base of respondents, the 96% of consumers who said they had used a travel agent and were satisfied with their general experience with travel agents represented a slightly better rating that the 93% who booked direct and were satisfied.

It's not the money

In measuring the reasons for selecting a booking method, the survey found that just 10% of consumers who use an agent are looking for the lowest price.

The top reasons for booking with an agent are familiarity and satisfaction. Of survey respondents who used an agent in the previous 12 months, 54% said they had done so previously and were satisfied.

Looking for expert advice and a recommendation from a friend were the next two highest-ranked reasons, at 13% and 12%, respectively.

"The agency community is not focused on price value," Koepf said. "It's all about the reasons why a customer will rave about their agent. You want them talking about how you exceeded their expectations."

Twenty-three percent of consumers are drawn to supplier sites because they are looking for the lowest price; 36% to OTAs.

Read more from the Consumer Trends report here.

Airplane-mouse graphic courtesy of Shutterstock.com. 

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