Many travel advisors said the news Feb. 27 that Gogo Vacations would shut down operations amid a strategy shift at parent company Flight Centre Travel Group was not surprising, but that it could mean a less competitive landscape and higher prices.
"It was a difficult but logical decision to close Gogo," said Charlene Leiss, president of the Americas for Flight Centre (No. 6 on Travel Weekly's 2023 Power List). "With the wholesale model struggling in recent years, it has become increasingly difficult to justify the high costs of maintaining this brand."
Many advisors said they had stopped working with Gogo years ago, mostly due to booking and customer service issues, and were working with other players -- including ALG Vacations, Pleasant Holidays and Classic Vacations -- companies that have implemented tools to make booking easier and customer service more accessible.
Jenn Lee, vice president of industry engagement and support at Travel Planners International (No. 31 on Travel Weekly's Power List), said the agency still had a decent amount of business with Gogo leading up to its shuttering.
"While we certainly do not like seeing our partners close, it seems that somewhere along the way they didn't keep up with the advisor's need for ease of quoting and booking," Lee said. "[There are] too many other players willing to invest in travel advisor needs."
Lee said that many TPI advisors said problems at Gogo started a few years ago when the company switched to a new booking engine called Helio, which they found was not user-friendly despite training offered by Gogo.
Despite its struggles, some advisors were saddened at having one less B2B wholesale supplier in the marketplace.
"This was such a surprise," said Jennifer Doncsecz, president of VIP Vacations in Bethlehem, Pa. "Twelve years ago, Gogo was one of our preferred tour operators, but we really pulled away a few years prior to Covid."
John Werner, president and COO of MAST Travel Network, also said Gogo stopped being a preferred supplier with MAST years ago but that some members still sold it and "always liked the personal level of service."
"I know Gogo will be missed by many agencies," Werner said. "Gogo was a very strong supporter of travel agents. You hate to see when somebody like that goes away."
Bad news for advisors?
Werner was among industry professionals who said the loss of Gogo Vacations does not bode well for travel advisors: "Any elimination of competition is not always beneficial for agencies in the long run."
Doncsecz agreed.
"One less tour operator means less competition and fewer options," she said. "Fewer options and less competition typically results in higher pricing and lowering of customer service standards."
But Werner also agreed with the assessment of the wholesale model by Flight Centre's Leiss, calling it a "very low-margin business [that] comes with high costs."
Competition has grown more fierce for wholesalers with the rise of online companies like Expedia and Booking Holdings, said Robert Cole, senior research analyst for lodging and leisure travel at Phocuswright. Other industry changes, from stronger hotel occupancy to the pandemic impacts, have also made things tougher for wholesalers.
"The hotel industry came roaring back with really strong occupancy, and the fundamental model of the wholesale business is that we are able to aggregate demand and channel it to our partners," Cole said.
But since wholesalers expect better rates and more inventory from hotels, that high occupancy made them less important to the hotels, which began offering fewer discounts.
"So then, something's got to give," he said. "Either you're going to make less profit as a wholesaler or you're going to try to squeeze off commission from the retailer, which is less attractive. That's a problem."
A number of wholesale suppliers have reported strong growth in the past year, including Pleasant Holidays and ALG, but challenges facing the sector remain.
David Solis, head of business development at Ultimate Jet Vacations, said the wholesaler is growing, citing "double- or triple-digit growth over the last 12 years consecutively," excluding 2020.
"That trend remains intact for 2024, as we are pacing to exceed last year's overall growth percentage based on the first two months of the year," he said.
Still, he said the biggest challenges facing the segment are stagnation, complacency and a lack of innovation in the operating model, especially as B2B distribution trends have evolved materially over the past decade.
"Wholesale distribution has increasingly been perceived through a lens of competition with its lodging hotel partners and a diminishing value creation for both its suppliers and customers," Solis said, adding that Gogo's exit "furthers sentiment that the entire segment continues to struggle in the face of evolving B2B distribution."