Are travel agencies going out of business?

If you’re someone who travels regularly, whether it’s for work, a weekend getaway here and there, or even an annual family vacation, you’ve probably used a travel agent at some point.

But for many people, travel agents may seem like a thing of the past. Online travel booking platforms like Expedia and Airbnb have exploded in popularity in recent years. Instead of contacting their local brick-and-mortar travel agency to book their trip, many travelers now use these online services to do it themselves.

Does this mean traditional travel agents will fail in the coming years?

The coronavirus pandemic and its impact on the travel industry may give us some clues.

How the pandemic has affected travel companies

There is a huge contrast between how the pandemic initially affected travel agents and its impact in the second year. First there was disaster, then there was resurrection.

Early epidemics

When the pandemic first hit, the travel industry was hit the hardest. Lockdowns, travel bans and bans on international travel mean demand for travel services has become virtually non-existent. Cruise lines stopped operating, airlines canceled flights and people had to cancel all travel plans. This had obvious knock-on effects for travel agents.

decrease in revenue

According to a survey conducted by the American Society of Travel Advisors (ASTA) in August 2020:

  • 93% of travel agencies reported a drop in business revenue of at least 75% compared to 2019.
  • 78 percent reported that income dropped by 90% or more.

These drops in revenue were all pandemic-related.

Major downsizing

The same study also found that:

  • Among respondents with W-2 workers at the start of the crisis, 75% laid off or furloughed at least one employee, but most laid off more.
  • More than 43% said they have laid off or furloughed three-quarters or more of their workforce.
  • More than 16% said they had laid off or laid off 50 to 75% of employees.
  • About 9% have laid off or laid off 25-50% of the workforce.
  • Only 7% laid off or furloughed less than 25% of their employees.

Shop closed

Several large travel agency businesses were forced to close many of their physical stores during the pandemic:

  • Australian travel agency Flight Center has closed 421 of its 740 stores.
  • German tour operator TUI is closing 166 stores across the UK and Ireland in 2020 and another 48 in 2021.
  • British travel company Hayes Travel closes 89 of its stores after the UK’s third national lockdown in early 2021.

Big companies are getting destroyed

Beyond just closing physical stores, some high-profile travel agents were forced to shut down entirely due to Covid:

  • STA Travel, a UK-based company specializing in travel for young people, including gap years and volunteering projects, was forced to close in mid-2020. STA had over 50 stores across the UK.
  • Upside Business Travel is the first major business-focused travel agent to go out of business in 2021.
  • Business travel management firm Lola was also forced to close in 2021.

2021 Resurrection

Obviously, the early pandemic hit travel agents hard. From small businesses to some of the biggest names in the industry, no one was left unscathed.

However, as 2021 progressed, more people were vaccinated and travel restrictions were lifted. Increasingly, travelers are turning to travel agents to help them navigate the ever-changing COVID rules and travel restrictions. In cases where restrictions lead to cancellations, travel agents can help them get refunds for airline tickets, cruise ships, hotels and package holidays.

Many travel agents are suddenly seeing a huge surge in business, even compared to pre-pandemic levels:

  • According to a poll by ASTA in March last year, 76% of travel agent customers saw an increase in 2021 compared to before the pandemic, with 81% saying they had heard from customers who had never used a travel agent before.
  • The survey also found that more than a quarter of travelers (27%) had always or often used a travel agent before the pandemic. But almost half of travelers (44%) say they are more likely to use a travel agent after the pandemic is over.

This resurgence would suggest that far from going out of business in the near future, travel agents may become more widely used for travel in the future.

But it’s not quite as simple as that.

Challenges faced by traditional travel agencies

Traditional travel agencies may have made a comeback in 2021, but they still face many issues and challenges in their fight to stay relevant.

Emergence of online travel booking platforms

Online travel booking platforms like Expedia and Airbnb allow customers to easily book their own trips from the comfort of their homes. In 2021, the online travel industry will generate more than $800 billion worth of revenue, with two-thirds of the global travel and tourism industry’s revenue coming from online sales. This represents huge competition for traditional travel agencies that mainly operate offline

Building online credibility and presence

With such fierce competition from online travel booking platforms, it is becoming increasingly important for travel agents to build a strong online presence. Having a user-friendly website, strong search engine rankings, an active social media presence, or even a mobile app has never been more important.

High fixed costs

Most traditional travel agencies also have higher fixed costs than online alternatives due to higher street fares. This could lead many to evolve and become fully online travel agencies in the near future.

If you are a travel agent is To survive in the long term, they need to evolve in multiple ways.

In many cases, this evolution is already happening.

The evolution of the travel agent

Internet, pandemic and many other factors have completely changed the working environment of travel agents. And they’re already adapting in more ways than one:

Crisis Manager

Due to the uncertainty that Covid has brought, travel agents have become more than just travel planners and providers. Many consumers now expect travel agents to be prepared with a plan in case something goes wrong while traveling.

It has been suggested that travel agents are now increasingly playing the role of a counselor or crisis manager. Some companies have even started offering 24-hour text messaging support to meet this demand.

In the world of business travel – as a platform where companies can book and manage all aspects of their travel – Travelpark is working to address this growing need for counseling and crisis management. We offer tools like automated travel alerts, partnered with responsible care companies, and have 24/7 customer care support services with real people, no bots, and a 15 second response time.

We do all this to ensure our customers are always safe, comfortable and informed.

Global issue experts

Some agencies have begun discussing global issues during weekly staff meetings. They then prepare sample e-mails on the subject to send to nervous customers.

Focusing on fewer customers

Many organizations have downsized during the pandemic and some have decided to stay that way. By taking on fewer clients, they can focus on more customized activities and benefits for each client. This helps them build better long-term relationships with each client.

Independent contractor

Staff furloughs and remote work have allowed the growth of independent travel agents. Many travel professionals have adapted to this new environment by working for independent contractor companies or joining host agencies.

So it seems that somehow, travel agents will survive! Perhaps they will continue to evolve and serve an ever-changing world of travel.

This is something we at TravelPerk always strive to do in the world of business travel.

The modern way of booking business travel

In the world of leisure travel, travel agents have had to evolve to survive. For business travel, we think that evolution is also necessary.

That’s why we’ve built a modern consumer-grade platform that manages all aspects of business travel. Our platform offers much more than a traditional business travel agency, with everything you need from booking and reporting to expenses. Some features include:

  • Instant platform setup.
  • $0 set up fee and no hidden costs.
  • 15-second response time for customer support.
  • 80% of the cost of the canceled trip.
  • Claim 20% of your travel VAT easily.
  • Free trial on any pricing plan.

With the world’s largest travel inventory we have unmatched choice and we’ve made corporate travel more flexible than ever with FlexiPark. It allows you to book any flight, hotel, car or train at any rate and cancel anytime, no questions asked. All business trips can be refunded at least 80% with just one click.

If you want to learn more about how TravelPerk is evolving the world of business travel, feel free to request a demo for more information.

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