Industry Gears Up to Face Challenges

From a bird’s eye view, agents face one major challenge: the economy. But when viewed up close, that one issue fractures into multiple challenges: chasing prices, constant marketing and cash flow, among them.

According to Jack Mannix, president and CEO of Ensemble Travel Group, at the highest level the main challenge facing the industry is a lack of demand, combined with the fact that the profitability of sales is not what it used to be.

“Agents are having to sell much more simply because the commissions on a per-transaction basis are lower than they have been before,” adds Jackie Friedman, general manager of host agency Nexion Inc.

Ignacio Maza, executive vice president of Signature Travel, also cited weak demand and lower prices as a major challenge for agents. “Sales are tracking below 2008 levels, yields are down and the business is not coming in at a predictable pace.”

All the executives Travel Agent spoke with, however, said their members are nevertheless busy booking travel, albeit at the much lower rates.

“Pricing has collapsed,” says Matthew Upchurch, CEO of Virtuoso. “On average, across all different product categories, we have at least 20 to 30 percent lower revenue, and at the same time people are working two to three times harder because there’s increased shopping by the customer.”

This increased shopping means agents must continue to work the sale, even after it’s booked. “The cost of the sale is higher because the retailer ends up having to chase pricing once they sell something to make sure it didn’t go down further or some other benefit was introduced,” says Mannix.

Maza says Signature agents are having the same problem. “Our agents need to resell vacations due to multiple price changes between time of purchase and day of departure. They are working harder than ever before, for less commission revenue on each transaction.”