Blog homeSpent a day in the company of independent high street travel agents at the Advantage Conference. Good to compare a travel industry conference that focusses on the offline travel industry with the upbeat momentum and drive often found at online travel industry conferences.
I want to focus just on one session – the leisure travel best practice session. The idea, as announced 4 months ago via press release, was to “contact with fellow members and …. learn from each other”. Last year 87% of delegates rated the sharing best practice session as excellent or good.
Some people argue that best practices stifle innovation but I believe that best practices should be followed and once you have them mastered then you can innovate.
LowCostDeals.co.uk – Website
LowCostDeals is a website setup by Aspen Travel. They were presenting about how important it was for agents to have a website. In particular they seem to be doing many of the actions I have been going on for years about on this blog – Facebook page, active (ish) on Twitter, they have a blog, a monthly email newsletter, they do evening live chat web events (6 pm) to discuss certain destinations etc.
On the surface this all about generating desire (rather than the historical reactive role of travel agents to service existing desire for a travel product). Great!
They do 1 million GBP per month turnover (about 1.5 million USD) and have a 10 to 1 ROI on their web investments (on 40,000 unique visitors per month)
From a web marketing perspective their activity looks pretty average but I wish I had their ROI!
One comment stood out. They are attracting customers from far and wide…. not just where they are geographically based.
Advantage have 700 travel agent members. In my view if all Advantage members followed the same strategy (rather than just one or two) there would be so much online noise that not all 700 could succeed. They would all be shouting for attention and individual members would suffer.
Advantage can support 700 geographic niches (split into business and leisure travel) but online can probably only support a fraction of that number (but each agent would be larger). Catchment areas will be so much larger for online local agents than local ones trading more traditionally.
But perhaps the Advantage consortium would be better served by having fewer, but larger, agents as members? I am sure Advantage head office know how this online concept will work out so that must be their strategic intention even if that isn’t how they present it to their current members.
Or perhaps they just suggested a web example as they need it to show relevancy but hadn’t considered the implications of wide adoption of their advice.
Holiday Travel – ATOL
Holiday Travel gave us an example of where they have applied for their own ATOL (basically a license to create travel packages including flights).
Holiday Travel are no longer a travel agent but a tour operator. This has meant that their margins (on tours) are now 15-20% (with some at 25%). This is great too.
In the long term, insufficient margin exists in the UK travel industry for a UK travel agent to buy a product from a UK tour operator for an overseas destination. You don’t need two UK margin layers. Hence this step is in the right direction for agents to follow in order to grow their margins.
ATOL sales are 20% of their business (unclear if by revenue, profit or bookings – but assume revenue I think)
A benefit of their ATOL is that they can create their own single price packages, joining together multiple components. Agents, selling the same package, would have to price up (to the customer) each individual component. This opaque pricing style is common online and permits a little cross subsidy and margin inflation.
This was a nice case study…. but unusually Holiday Travel, I believe, had purchased their ATOL themselves (rather than buying one from Advantage head office). Meant that the Advantage guy (moderating) had to jump in at the end to say that they sold ATOLs too…. at competitive prices. Well if they were that competitive then their members would have brought via them, wouldn’t they!
So muse on what would happen if all these agent members of Advantage become tour operators. They won’t of course as being a tour operator is tough (you need to do safety checks on your suppliers, have all sorts of insurances, a 24 hour phone number etc etc… its not just a legal change but much more complex than that).
Why would all these members need to stay as Advantage members? If these small agents really want to be tour operators there are alternatives – they can become TOPP insured, they could join TTA etc etc. A whole range of opportunities become available to them that are not available as a travel agent consortium member.
Also being a tour operator is a completely different concept to being an agent.
Agents have a single customer in front of them at any time – hence you have to have great supplier networks and reservation systems to search 10,000 products to find a handful that match the one customer in front of you. Its all about search.
Tour operators have a much more of a marketing challenge. You have 10 tours. You must find the 1000 customers who are looking for those 10 tours. Marketing, marketing, marketing.
If Advantage were running a network of 700 tour operators (rather than 700 travel agents) they would need to massively alter their reservation system and supplier relationship strategy.
Again, wonder why then that Advantage offered up this as a great best practice for other agents to follow. Great for that business yes, but not great for Advantage.
Finally
I enjoyed the day. Felt a little alien going to a travel conference where there was hardly any mention of online travel at all. But these business people are entrepreneurs just like us travel startup people. We need to respect them as they have years of experience. Their main challenge is being locked into local, geographic sales areas when us online lot can sell over the entire country (or multiple countries) without any real issues.
Where we differ is that online travel people tend to start with the principle that they are passionate about the web and then look to setup an online business. The offline travel folk tend to come to the web as just another marketing channel. They have no passion for it.
Which is why I am sat here at 9.30 writing a blog post and the rest of the conference is enjoying the gala dinner. Ummm – perhaps they are right afterall!
