Aug. 11 will mark five months since Covid-19 was declared a pandemic by the World Health Organization and the travel industry entered an induced coma.

Since then, new bookings all but dried up, and travel advisors have spent much of their time processing cancellations or rebooking trips into an uncertain future.

Despite a lack of revenue, most agencies are nonetheless still operating. But as the pandemic continues, concerns are mounting that closures on a larger scale may be on the horizon.

Should that occur, it won't be because agents aren't taking preventative action. Predictions that pent-up demand will lead to a surge in travel bookings at the other end of the pandemic is a strong incentive for agencies to hang on, and many are reshaping their operations to that end. Some are lowering overhead by, for example, moving from a storefront into a home office, often while affiliating with a host agency.

Wave of closures holds off

"We really haven't yet seen a big wave of our agencies closing up," said Roger Block, president of Travel Leaders Network.

Some brick-and-mortar agencies whose leases were up have moved their operations home. Other agencies have contacted Travel Leaders Network about the potential consequences of closing their businesses, asking about existing bookings, staff and independent contractors. But those are still, for the most part, "one-offs," Block said, rather than a trend.

"If this continues for another three or four or five months and there isn't really a sharp trend upward, then yeah, people could become so frustrated they throw in the towel," he said.

Signature Travel Network is experiencing something similar, according to president and CEO Alex Sharpe. One member agency has purchased another, and Sharpe is working with a handful of agencies interested in a similar path. Signature has also acquired six new members that were part of other consortia, a significant number considering its ranks hover at around 200.

The Western Association of Travel Agencies (Westa) has seen about four closures, said COO Mike Estill. But all had already been planning to close and accelerated their timeline because of Covid. Westa, too, has seen brick-and-mortars move to a home, or "virtual" office.

"I think the opportunity to experiment with this virtual model during the pandemic is probably going to be one of the big changes to come out of this. It helps business owners of all stripes come to grips with the pros and cons of a virtual workplace," Estill said.

Steve Gorga, executive vice president of P. Jason King Associates, said most agency owners appear to be waiting to make a decision about selling. Specifically, they want to find out if there will be another round of federal funding for businesses, and what portion will be forgivable.

Selling a business can also be an emotional process, Gorga said, which could be another impediment.

Layoffs, furloughs common

Staff layoffs and furloughs in the agency space have been common.  

Block said "the vast majority" of Travel Leaders Network members have instituted some kind of cost-reduction program related to staffing.

At Ovation Travel Group, CEO Paul Metselaar said some 500 employees have been furloughed.

"I have no idea when and if we're going to be able to rehire them, and it just breaks my heart," he said.

Similarly, Flight Centre Travel Group has "a large population" of travel advisors on furlough, said Marc Casto, president of leisure brands in the Americas. But the company hopes to bring back as many as possible once travel demand increases.

Flight Centre has also reevaluated its retail structure, reducing the number of its Liberty Travel stores in the U.S. and Flight Centre stores in Canada to 30 each, operating as hubs for consultants. Advisors have the option of working from home.

'We've lost zero of our good agents'

Neither CruiseOne/Dream Vacations nor Cruise Planners, the two major home-based travel agency franchises, reported agency closures.

But both are also seeing interest from travel advisors who are new to the industry, a trend that host agencies reported, as well.

KHM Travel Group has brought on 290 new agents since March 1; the pace has slowed over the months, but it's still happening, according to vice president of sales Geoff Cox.

Conversely, 195 agents have contacted the host with concerns about their businesses. Of those, 46 chose to cancel their contracts, while 149 put their membership on hold until further notice; a few dozen of those subsequently returned.

"The most amazing thing is  and this is what's truly remarkable  we've lost zero of our good agents," Cox said. "Zero."

He estimated that 80% of KHM's business comes from the top 20% of agents, and all of them remain onboard.
Nexion Travel Group is also concurrently signing on new agents and seeing others close up shop, president Jackie Friedman said. Approximately 25% to 30% of its members have switched to a Nexion plan that carries no monthly fees for affiliation.

"That can indicate that they're getting ready to close, or, frankly, that they just want to wait it out and return to higher commission split options when the business starts coming back in," Friedman said.

A number of Nexion advisors have turned to other, temporary revenue streams during the pandemic, she added, including making and selling face coverings and taking jobs in supermarkets.

One trend many people expect to see accelerate: traditional agencies closing up shop and opting to be hosted. Host agencies reported a number of inquiries from agency owners, and Travelsavers has already seen some make the move.

Chief sales officer Kathryn Mazza-Burney said that while "less than a handful" of Travelsavers agencies have closed, 11 have moved to the Network of Entrepreneurs Selling Travel (NEST), its home-based brand. Like others agency groups, Travelsavers and NEST are seeing an uptick in advisors who are new to the industry.

While trends indicate some resiliency and stability, Friedman, like others, has concerns for the future.

"The continued pauses, the border closings  I'm definitely sensing that even folks that were doing all possible to remain positive are starting to question" their future in the industry, she said.

"That definitely concerns me. They can't go on forever with very little income coming in."


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