Business conditions for travel agencies today amid the coronavirus pandemic have some striking parallels to what was going on 25 years ago, when the modern host agency model began to emerge. For travel retailers, both eras are defined by extreme disruption, an uncertain future and the need to pivot or perish.
Nexion Travel Group was founded in 1995 in San Jose, Calif., in that insecure environment. Its current president, Jackie Friedman, addressed the topic during the host's recent virtual conference, CoNexion, and at a media event just before the event.
Around that time, the commercialization of the World Wide Web led to a number of new businesses. Nexion was founded the same year as Ebay and Match.com. Amazon debuted the year prior, and Travelocity and Expedia were taking shape, to be launched the following year.
"The digital world was really, really opening up, and it enabled companies to do business in ways that, prior to that, we really never dreamed of," Friedman said. "It made it possible for a number of businesses and business models to emerge, and Nexion was at the forefront of that."
But 1995 also signaled ominous shifts in airline distribution strategies. Airline commissions were, at the time, the core revenue stream for most travel agencies, and that year, airlines capped base agency commissions, the first step to eventually eliminating them. Travel agencies were left scrambling.
In fact, Friedman said, there were major concerns that agencies wouldn't survive.
Many agencies closed, but others found additional revenue streams, including charging service fees, and searched for a way to reduce costs.
Technology created a problem, but also a solution. "They could get rid of GDS contracts," Friedman said of travel sellers. "They could get rid of ARC appointments. They could work from home now, or really anywhere now, with a lot of this technology."
Nexion initially offered access to all four GDSs and supported agents in ARC reporting, she said. Host agencies like Nexion enabled the proliferation of home-based agents and helped them stay in business through turbulent times.
In 2003, Nexion was acquired by Sabre. That is when Friedman got involved in the company. In August 2010, the host was acquired by what was then Travel Leaders Group, now known as Internova Travel Group (No. 7 on Travel Weekly's 2020 Power List).
Today, Nexion is headquartered in Irving, Texas, and has just shy of 5,000 independent contractors. It had breached the 5,000 mark but suffered some Covid-related departures; some new independent contractors are still onboarding, though.
"If you really look at what's happened, right now we're experiencing a lot of the same things we did 25 years ago," Friedman said. "Nexion grew and changed with the industry."
In the seven months since the Covid-19 outbreak was declared a global pandemic, the travel agency community has suffered mightily, with revenue dropping to almost nothing for some agencies. Hopes for a return to meaningful travel volumes in the summer and fall were dashed.
Many have been left in the same position their counterparts found themselves in in the 1990s: They need to diversify revenue and slash expenses.
And again, there has been a movement toward charging consultation fees.
Host agencies, Nexion included, have also been attracting former brick-and-mortar agency owners, as well as their agents and independent contractors who have been displaced due to coronavirus.
"The foundation of our success is embracing disruption," Friedman told Co-Nexion attendees. "Does that sound familiar? Is that what we're currently facing as an industry? Because now, more than ever, we need to keep the ball moving and focus on the future."
Travel -- and travel retailing -- will change after Covid-19, just like it did after 9/11, Friedman said. She encouraged advisors to stay informed, listen to experts and prepare for the business recovery she believes is coming.
"Over the years, we have certainly seen our share of ups and downs, but one thing we've learned is that we are resilient and we do find ways to both overcome challenges and become more relevant than ever before," she said. "I believe that we'll do that again. We all need to believe that we'll do that again. We just need to have the patience to see it through."