WASHINGTON -- Something of a war of words erupted as ASTA and ARTA
separately blasted a Bear Stearns & Co. report that predicted
25% of travel agents would lose their jobs during the next few
years as more consumers book travel through Web sites and not
through brick-and-mortar agencies.
In the report, released April 17 at an e-commerce convention in
San Francisco, Bear Stearns predicted competition pressures would
force many on-line agencies to consolidate, while in a press
release promoting the report, it estimated that about one-quarter
of agents would be put out of work by the Internet.
No data exist in the report to back up the 25% prediction.
ASTA called the report "unsubstantiated" and said the Wall
Street firm misinterpreted ARC data to arrive at its
conclusion.
The Society said Bear Stearns also misstated the number of
agencies that have recently closed and ignored the growing amount
of business agencies are conducting despite airline pay cuts and
challenges from the Internet.
But Robert LaFleur, a Bear Stearns associate director, defended
the report.
"This is our opinion," he said. "There was not some long,
algebraic formula used to reach this conclusion.
"We looked at the attrition rate of [traditional agencies] and
the growth of the Internet travel sites and came to the conclusion
that a lot of travel sites are not viable and a lot of travel
agents who do not adapt to the on-line world will not survive."
LaFleur said travel retailers who work for small agencies that
are part of a consortia planning a major Internet presence -- such
as Vacation.com and ByeByeNow.com -- were not likely to be part of
the 25%.
Those retailers, he said, would probably survive because their
agencies were adapting to the "new reality" of the Internet.
Paul Ruden, ASTA staff vice president of industry affairs, said,
"The harsh truth is [that verification for the 25% figure] is not
in the report ... I think they simply made some mistakes in
understanding the data they were looking at."
"It is unfortunate when a firm as respected as Bear Stearns
makes unsubstantiated statements that are not only potentially
harmful to business, but that investors may be using to make
important investment decisions," added ASTA president Joe
Galloway.
ARTA president John Hawks said, "We don't think there will be a
25% fallout. We think we are going to see the same, steady
attrition we've seen over the last few years."
Hawks said the Bear Stearns report did not take into account
current figures that show agents continue to sell 80% of air
tickets despite Internet deals and airline commission cuts.
"These stock analysts and on-line gurus forget the basic fact
that the great majority of Americans still do not use the Internet.
We think the big advantage for the small, independent retailer is
its hometown presence."
Hawks said having a physical location increasingly has become a
key to success in selling over the Web.
"Look at Charles Schwab [the brokerage firm]," Hawks said. "It
is pulling far ahead of its on-line competitors because it not only
has a great Web site, it has great penetration in terms of physical
locations in most markets."
Travel agents, meanwhile, took the Bear Stearns report in
stride.
Maryann Harlow, owner of Wheatland Travel & Cruise Center,
Pullman, Wash., said she found its conclusions no worse than others
she has seen.
"Other studies have [detailed] the trouble all the dot-coms are
in and [predicted] the big will get bigger and the rest will have
to specialize or go away."
But Harlow isn't worried about the Internet. Although her agency
doesn't have a Web site yet, Harlow credits the Internet with
inadvertently helping her business grow.
"If you book travel on the Web, you will encounter the lack of
having someone to ask questions of. There is no consulting. So the
Internet highlights the services that we give clients."
Barbara Hall, manager of Paoli, Pa.-based Pennsylvania Travel
said her agency's Web site has generated business.
"I got 110 inquires off our Web site Monday morning. I got 76 on
Tuesday. The Internet is [just] information."
Hall said the Internet will displace some agents, but those who
embrace the technology will remain in business.
Industry educator Bob Joselyn commented, "The way travel
agencies do business will have to change.
"If you do what you did yesterday and you don't change, I think
you're toast. So I think [the Bear Stearns study] is accurate. The
Internet is going to put a lot of agencies out of business, but not
those with the courage and vision to change the way they do
business."
Nevertheless, Joselyn predicted the Internet overall will give a
boost to the travel industry. The Internet will "increase the size
of the travel pie," he said, which ultimately will be good for all
travel agents.
Laura Del Rosso contributed to this report.