Consumer Trends 2012: Booking channels

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Consumer Trends 2012Consumer preferences for short getaways combined with supplier investments in booking sites and call centers appear to have resulted in unexpectedly high percentages of bookings made outside the agency distribution channel, according to Travel Weekly's "Travel Booking Trends Among Leisure Travelers 2011-2012" survey. (Read more from the Consumer Trends report here.) 



The savings on distribution that suppliers realize, however, might be a somewhat mixed blessing, as the survey also shows that consumers who book with agents travel more frequently, take trips that are about 50% longer per trip and spend almost 50% more per night booked.

Consumers using travel agents also had the highest levels of satisfaction with the booking experience.

The survey revealed a complex marketplace with several factors affecting results, including length of trip and use of multiple channels for booking. Data showed that consumers are making the lion's share of bookings directly with a supplier in six out of nine product categories. The results found, for example, that 61% of resort hotel bookings were made directly with a supplier; 5% were handled by a traditional agent. The figures are nearly the same for nonresort hotels, with 60% of bookings done directly and 3% through a traditional agent.

Online travel agencies (OTAs) took second place as the most-used booking method.

It should be noted that the survey data pertaining to total bookings was based on almost equal numbers of one- to three-night trips and four-plus night trips. The shorter journeys reflect "a considerable proportion" of weekend getaways, the survey states, likely in the family car, in which case the services of an agent would be sought less frequently.

In addition to supplier sites, OTAs and agents, the survey identified other booking options, including travel search sites, big-box retailers and "combination" and "other" categories that might include use of an agent for only a portion of the trip.

Other product segments with similar findings are air, car rental, escorted tour, rail and all-inclusive resort.

Just two segment results, cruises and package tours, showed more than 20% of bookings conducted through traditional agents.

For cruises, 34% of cruise bookings came through an agent, compared with 39% that came direct and 16% through an OTA.

The agent-booking percentage for cruises revealed in the survey is lower than the range suggested by most major cruise lines, which have put the number somewhere between 70% and 80%. Those higher figures cited by the lines include OTA bookings.

One senior cruise executive said that the lower-than-expected cruise numbers for agent bookings might have been the result of consumer confusion. Many traditional agents have become very effective at online marketing, this executive said, and consumers who use a traditional agent on the Internet might report that the booking was made through an OTA.

There's a slimmer difference with package tours: 24% of package-tour bookings were made by an agent, 27% were direct and 26% were via an OTA.

Bells and whistles

The survey did not specify the percentage of supplier-direct bookings that were made online as opposed to through a call center. But the vast majority of supplier websites now have content-rich pages and real-time booking engines. They tend to be visually appealing and fast, often with a user-friendly booking process that can be completed in three or four steps. It's all part of a concerted effort to advance online bookings and ultimately reduce staffing needs at call centers.

Taking a closer look at the escorted tour segment, for example, the survey found that just 13% of escorted-tour bookings were made through an agent, while 58% of bookings were direct.

Steve Born, vice president of marketing for the Globus Family of Brands, said the company puts plenty of muscle behind its online presence. He noted that Globus has four consumer sites, one for each brand: Globus, Cosmos, Monograms and Avalon Waterways. Globus and Cosmos offer traditional escorted tours, while Monograms provides FITs with local hosts and customized transportation.

"Our mission with all of our sites is to provide the easiest pathway possible between travelers and our brands," Born said. "Sounds simple, but there's a lot to it.

"Each of these sites undergoes constant updates and improvements, as we have about five new enhancements per month across all of our sites. Improvements in display technology -- videos, slide shows and virtual tours -- have come a long way. The use of third-parties to host those big files, and the use of the cloud, has helped minimize load time," he said.

The Globus brands' websites continue to see substantial growth.

"Every measurement of site visitation and usage is up for each of our brands," Born said. "Site traffic in the form of unique visitors continues to have double-digit growth year over year, and they're much more engaged visitors, spending more time on the site per visit, experiencing more page views and taking more steps toward active travel planning."

Supplier sites are making gains in the cruise sector, too.

Carnival Corp. Chairman and CEO Micky Arison told analysts during the company's recent second-quarter earnings report that about 19% of bookings across its 10 brands are being booked direct. He expects that number to rise, he said, with the "passing of generations," since younger consumers who have grown up with the Web are likely to be more comfortable making online purchases.

And the survey found that age does matter when it comes to booking with travel agents. Just 20% of respondents age 21 to 34 said they used an agent to book travel in the last 12 months. That compares with 25% of those age 35 to 54 years old and 26% of those 55-plus.

Direct and OTA bookings are largely price-driven, the survey found.

Thirty percent of respondents who booked through an OTA said they were looking for the lowest price. Of those who booked direct, 20% said they did so to find the lowest price, while just 10% who booked with an agent were motivated by finding the lowest price.

Loyalty rules

Retail travel agents earn high marks in client satisfaction among consumers who have used the services of a retailer to book travel in the past 12 months, according to the research report.

Fifty-six percent of respondents said they were extremely or very satisfied with the services their agent provided. Add those who were somewhat satisfied and the number jumps to 92%.

The good ratings help to solidify the travel agent loyalty factor. Of those who booked up to two trips in the last year, 65% used the same retailer to handle the transactions, the report found. More than 70% of those who traveled more frequently, meaning three or more times, relied on the same agent to book each trip.

These statistics buoy the conventional wisdom that agent loyalty is the backbone of an industry that, while changing at a rapid pace, continues to be rooted in personal relationships.

The report also identified a correlation between the use of an agent and the length and expense of a booked trip. Bookings made by an agent reflect an average length of 7.8 nights vs. 5.3 nights when an agent is not involved.

Agency clients spend significantly more, about 47.5% on average. Using a total trip base of 1,673, the report found that agency-generated bookings averaged $351 per night compared with $238 per night on trips not booked by an agent.

This is all good news to travel retailers. Satisfaction implies that clients are likely to remain loyal, and more expensive product sales mean higher commissions. But as the playing field has widened to include online competition, the survey results show that traditional agents are getting an increasingly smaller piece of the booking pie. That might help explain why so many retailers are focusing on niche markets, where they hope to garner a larger slice of a smaller pie.

The booking trends survey found that three out of four respondents who had used an agent in the previous 12 months believed that their retailer was a specialist in the vacation product they wanted to buy.

That's key, said industry veteran Stuart Cohen, who operates several travel businesses, including ExclamationPointsInc.com, a coaching and mentoring practice for travel retailers and others.

"Consumers favor an agent who specializes," he said. "[There's a] higher level of trust and integrity that comes when you specialize. A consumer, even before talking to you, would believe that you know more than they do, and when it comes to their vacation they don't want to make a mistake."

A niche agent, he added, is simply going to know more, and they will impress and retain the customer.

"They know the little, tiny details that can be extraordinarily important, things that generalists don't know," Cohen said.

Shopping and buying

Based on the survey results, travel reservations are not always started and completed exclusively through one booking mode, such as a supplier site, an agent or an OTA.

Small percentages of respondents indicated that they used a combination of booking options for every product segment. In the all-inclusive resort segment, for example, 36% of bookings were made directly, 20% were made with an OTA and 11% with an agent. But in 5% of bookings, consumers used a combination of sources to complete their travel purchase.

The results do not define what constituted these combinations, but it seems reasonable to surmise that it would include "show-rooming," the practice used by some consumers of visiting a traditional agent to scope out products and obtain objective information, then booking later with a supplier or an OTA.

"Show-rooming goes on all the time," said Robert Joselyn, an industry consultant who is president and CEO of Joselyn Tepper & Associates and Travel Agency Management Solutions, which specializes in financial benchmarking for the trade.

"If [consumers] can get expertise on a particular tour or cruise, they often will then go shopping on the Internet to look for lower prices," he said.

According to the survey, respondents indicated that 12% of their bookings were with an agent because they wanted expert advice, while just 1% of bookings were with a supplier or OTA to get expert advice.

Consumers seek out agents because they are experts, so the answer is that agents should charge for their advice, Joselyn said.

"They can charge a consulting fee and tell the consumer which websites to look at," he said. "But the idea of simply retailing other people's products vs. being a knowledgeable consultant is not a viable business model for agents," particularly as Internet competition becomes more fierce.

"You've got to charge for advice, and you've got to be a niche player," he said.

Read more from the Consumer Trends report here.
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