OTAs vs Bricks-and-Mortar Travel Agents: Where does the future lie?
With the growth of the internet and the emergence of a whole new trend of millennial-travel, Online Travel Agencies or OTAs have become the dominant marketing channel in the Travel Industry. Major brands such as Priceline, Expedia, Travelocity, Orbitz Worldwide control more than 95% of the travel market in the United States.
Initially, OTAs were formed to sell excess inventory in times of lesser demand which has now become the major power in terms of international bookings – so much so that they are the primary source of revenue for a lot of hotels. According to PhocusWright’s whitepaper, more than $19 billion in hotel gross bookings in the United States were done by OTAs alone.
Industry giants such as Priceline and Expedia have now advanced into sophisticated marketing channels, irrespective of the size of the hoteliers. The greatest advantage of these OTAs is that they have enabled consumers compare the different travel options such as location, time, price, availability and more under one roof.
OTAs had gross bookings last year exceeding $150 billion, which is about 38% of the global online market and 13% of the global travel market. This travel sales figure is growing at 12% rate annually and is spanned across both leisure and business travel segment. Currently at its dynamic best, the Online Travel space is expanding rapidly through digitization and strategic alliances. The debate starts here on whether this is affecting the traditional travel agents given the vibrant emergence of the online travel domain.
Many travelers shunned the concept of OTAs when it started in 1994 – lack of credit being one of the top reasons. Fast forwarding twenty years, OTAs now dominate the wallets and minds of the millennial travelers.
A CNN report from 2013 showed that the number of travel agencies in the US declined from about 34,000 in the mid-1990s to 13,000. However, these factors do not matter for the home based travel agents or those who are not linked with the Airlines Reporting Corporation (ARC) – the overall number of the travel agents are considerably less in number than they were 20 years ago.
Is all lost for travel agents?
Although it might seem to be the discursive reason to assume that the brick and mortar agencies have reached their final breath, some reports say that places like Australia have travelers who prefer in-person booking in most of the cases. In fact, 50 percent of Australians traveling overseas used a travel agent than an OTA. Given the rise in traveler expectations in terms of customer service, a travel agent often has to resort to a consortium to essentially work out everything – being marketing manager to sales lead. The consortium focuses on facilitating relationships both ways but does not guarantee a high-end consumer content at the end. This is primarily because, although they share the same roof of profit, integrity is altogether a different issue. Implementing complex technology from the background makes it difficult for a travel agency member.
Moreover, the perennial predicament continues from the commerce value school of the travel agents. To make up an organization of independent travel planners and consultants who are trained in marketing assistance, have technological fluidity and are equally confident in customer care needs too much of experience and training.
And lastly, the source of lead generation is a major challenge. While the online travel agents have the advantage of hovering the data and automation available online, the travel consultants can capitalize on a vast database of the potential customer database.
So how can Travel Agents stay relevant?
We suggest the following steps as the remedy for the travel agents to buck up the fight against the OTAs:
- Inflate the idea that the human element is still prevalent
Under-budgeted and under-staffed direct online marketing efforts are scoring sadly for the travel agents. Employ DOSMs who will take care of the online channel which can enhance the value of human element. It might not be clear to the customers who are incentivized as the market share arm is shifted from OTAs to direct online bookings; make them aware of the business scroll.
- Invest in technology and online marketing channels
Independent travel agents for long have ignored the scope of digital marketing and technology. The rigmarole in planning travel is getting complicated with time and it is just the travel agents who can retain the possible touch point. Any average travel customer nowadays has access to Google search; so make sure you can give those examples of latest choice trending globally and match up to the likes and dislikes of the customers. In addition to providing a great service offline, giving customers the flexibility to search and book online through a good booking website is also key to keeping them loyal. This can be achieved through the use of a good travel agency software with back office capabilities that allows you to automate routine manual tasks and focus on selling travel. Also, keep the entire path of purchase to payment clear and open to the customer in terms of digital platforms – it enhances the trust.
- Build a strong presence on social media
Social media platforms such as Facebook, Twitter and Instagram etc. have a massive impact on the traveler’s forum. It is thus almost mandatory for the travel agents to post updated content about the local events, culinary distinctions, special promo offers during the festival and more. Relevant content on social media helps in better demographic targeting and consequentially draw superior leads.
- Sleek web presentation
Marketing landing pages with proper image promo slides and testimonials definitely count to the image building of the company.
Travel booking sites although might be taking the lion share of the market value, one thing that remains irreplaceable with travel consultants is the human element. Travelers today are realizing that despite the onslaught of OTAs, there remains a strong option in travel agents as far as personalized service is concerned, where a human being will listen to their needs and expectations and can get a customized recommendation for travel that’s beyond issuing tickets and vouchers. Therefore, travel agents must offer the highest service standards along with the convenience of online bookings to win the millennial customers.