A new Phocuswright study portrays the U.S. travel agency
community as thriving and forecasts that it will continue growing, thanks in
large part to the influx of independent contractors (ICs) joining the industry's
most productive channel.
"Ten years ago, that segment was sort of like the
stepchild of the business," said Mary Pat Sullivan, Phocuswright's leisure
travel analyst and one of the report's authors. "Everybody kind of looked
at the independent contractors as not necessarily supporting the growth of the
business, and I think what this research shows is that they're fueling the
The report, "U.S. Travel Agency Distribution Landscape
2016-2021: From 'Survivor' to 'The Bachelorette,'" was published late last
month. Those popular television shows were chosen because
Phocuswright's first analysis of the agency landscape in 2006 "assumed
travel agency extinction -- and we were proved wrong."
"Our research shows that travel agents aren't only
surviving; they're being courted: Suppliers, consortia and host agencies are
trying to attract travel agents to their products," the report states. "Leisure
agents are specialists; they are entrenched in certain consumer groups and are
communicating constantly with their customer network via mobile devices, social
media, whatever works. Personal networks and relationships are playing into
agents' hands, since this shows they're truly the keepers of the keys to
lucrative leisure travelers."
The study was compiled using results from a survey, answered
by 1,551 agents, coupled with more than 20 interviews across the industry.
In 2017, the U.S. agency market saw $112.8 billion in total
sales, according to the report. That number is forecasted to reach $127 billion
in 2021, a nearly 13% increase. To size the market, Phocuswright collected
supplier revenue for the air, car, hotel, cruise and tour segments, according
to Lorraine Sileo, senior vice president of research and business operations.
Three main factors contributed to agencies' success,
according to Travel Leaders Group CEO Ninan Chacko: "complexity, trust and
the demand for experiential travel."
Consumers are inundated with information from the internet
and social media and are turning to advisers for help. Positive experiences
with those advisers turn consumers into repeat customers, Chacko said. Advisers
also often have access to attractive things like upgrades and price advantages,
and they send clients on the custom, Instagrammable trips they are seeking.
The growth in the market and the overall positivity of the
study will be helpful to ASTA with consumer outreach, according to Eben Peck,
the Society's executive vice president for advocacy.
"This gives us pretty substantial ammunition in our everlasting
war in the consumer media to drive up the perception of our industry and fight
back against the perception that travel agents and advisers are going away,"
Peck said. "We're going to be shouting this from the rooftops, using this
study and some of our own research, as well."
'IC-ification' of the industry
Phocuswright's report found that ICs are "fueling the
growth" of the agency landscape.
Just over half (51%) of survey respondents reported they are
home-based agents (44% are storefront agents, while the rest are travel
management company agents or answered "other"). Sullivan said the
average agency reported having 40 ICs and 14 employees.
"That tells me that the industry's figured out that
using ICs is a good way to grow -- and grow in a scalable way," she said.
It's a phenomenon that David Kolner, Virtuoso's senior vice
president of global member partnerships, calls "the IC-ification of the
industry." Kolner has been tracking the trend in recent years, and he said
the study helps further define it.
New storefront investments
The study also found that agents are increasingly interested
in investing in brick-and-mortar agencies, though they are likely to be
different than their more traditional counterparts. Sullivan said that around
10% of respondents reported that they've already opened a new storefront, and
another 10% said they plan to in the next year.
"What we don't know is what that's going to look like
yet," she said. "I think we're seeing a difference in the kinds of
It could be an agency that's also a coffee shop, Sullivan
said, or perhaps a library-like setting where potential clients can come to
research travel and then talk to an agent.
"The diversification of business models continues to
grow," Peck said. "We're definitely seeing a lot of growth on the
independent adviser side, but that shouldn't imply, then, that storefronts are
going away. All of our members report doing great business, including
storefronts. You've heard about things like Departure Lounge in Austin -- new,
innovative business models using the storefront concept that have been killing
Sullivan said she believes that agents are investing in
their businesses by opening storefronts because they have confidence in their
place in the industry, which speaks to another finding of the study: that
agencies, OTAs and suppliers' direct-to-consumer efforts are "coexisting
According to the study, agents currently hold a 30% share of
the travel-booking channel, outpacing supplier websites (28%), offline direct
bookings (24%) and OTAs (18%), making agencies the top channel. By 2021, the
study predicts, agents will cede only one percentage point, and supplier
websites will gain two, to hold 30% of the market share.
"I just don't think it's as competitive as it used to
feel," Sullivan said.
Chacko predicted that coexistence will continue, but the
winners will be the suppliers "who highly value their relationships with
travel advisers as a prime distribution channel."
"Ask any supplier who sells the suites and the front of
the plane," Chacko said. "It's not the OTAs. As the products become
more complex, it will place an emphasis on the human touch in helping travelers
sort through and pick the right product and options for them."