australian travel agent barometer 2014

Australian Travel Agent Barometer 2014Simon Bernardi ConsultingOctober 2014www.australiantravelagentbarometer.com

www.australiantravelagentbarometer.com.au 1

http://www.australiantravelagentbarometer.com/


Contents

Highlights – p4 - 5

Key competitive threats – p6

About the survey - p8 – 10

AFTA / ATAS – p12 – 15

Confidence levels – p16 -17

Buying groups – p19 – 22

Online – p24 - 28

Consultants, appeal of home based model,remuneration structures – p30 – 32

Most important suppliers – p33

Investing in technology – p35 - 36

Easiest cruise lines to do business with – p37- 38

Highlights of the survey and key competitive threats


Highlights of the survey

Strong Optimism¾ There is a strong feeling of optimism in the industry and whilst this was the case last year, many

agents this year have developed plans for selling through new channels such as online. ¾ 82% of owner managers said they will be operating their business in 5 years timeEndorsement of AFTA and support of ATAS implementation¾ There is support for the role AFTA is playing on behalf of the industry and support for the new ATAS

system where training is being implemented by agents and this is acknowledged at consultant level. Many believe suppliers should not deal with non accredited agents and that insolvency insurance should be included as part of ATAS

Move away from traditional wholesalers¾ There appears to be a shift away from traditional wholesalers as agents access new suppliers to

ensure competitiveness and ease of booking. The type of suppliers benefiting from this include GTA , Travel Cube, Expedia TAAP, Orbitz, Excite, and Ready Rooms.

¾ Nearly 80% of consultants have used an OTA to make bookings¾ Many agents are also using DMC’s (Destination Management Companies) to make bookings outboundAgents investing in technology¾ Agents are intending to invest in technology in the next 12 months¾ Many are developing online capabilities¾ Most have decided which buying group to belong to¾ 80% of owner managers said they will remain in the buying group they are in and are not intending

moving


Highlights of the survey

¾ The overwhelming majority of owner managers are optimistic about the outlook of the Australian retail travel industry

¾ 80% of Agents either had a online business strategy or were developing one.This is a turnaround on last years Barometer results where only a minority of agents had or were developing a plan

¾

¾ 84% of agents were not considering changing buying groups

¾ 75% of respondents agree AFTA is doing a good job in its advocacy of the industry

¾ 68% of respondents have implemented the ATAS accreditation scheme in their business

¾ 48% of respondents said that suppliers should not deal with unaccredited agents vs. 32% who said they should

¾ 35% of respondents said they were covered by their buying group for insurances

¾ 36% of agents said they do not intend to take out further insurances i.e. airline failure, end supplier insurance

¾ Qantas and Qantas Holidays continue to be the most important suppliers for many agents


Key Competitive threats

¾ Online competition is the major concern of agents today linked with the perceived strength of Flight Centre Group

¾ Many agents also expressed concern about new untrained agencies entering the market and undercutting pricing as well as giving agents a poor reputation, especially agents that were not members of AFTA or ATAS

¾ Lack of trained staff was mentioned by some agents but not as big an issue as in past surveys

¾ Commission reductions by suppliers was also a major concern by most agents

¾ Most travel agency owners and managers agreed that the key competitive threats to their business were

1. The internet and online competition 2. The Flight Centre Group is seen as a major competitor to most agents3. Suppliers offering customers direct better deals than they can get through a travel agent



About the survey

About the survey

¾ The survey was conducted in October 2014

¾ The Australian Travel Agent Barometer is independently operated by Simon Bernardi Consulting www.simonbernardiconsulting.com

¾ Just under 300 participants took part in the survey. All participants were either Australian travel agency owner managers or were consultants

¾ All major buying groups and most states were representedOwner Managers Consultants


http://www.simonbernardiconsulting.com/

Owner Manager Demographics

¾35% were male and 65% female

¾80% of the respondents were city based

¾63% were between 46 and 65 years¾¾90% are AFTA members and 69% were ATAS accredited

¾30% have turnovers annually over between $5 million to $10million +

¾55% of agents were leisure based

¾34% were Helloworld agents


Consultant Demographics

¾ 19% male and 81% female

¾ 89% were city based

¾ 60% were leisure consultants

¾ Over 70% had been in the industry for in excess of seven years and 46% had been consultants for over 15 years

¾ 37% were between 36 – 45 years of age and 32% were between 46 and 65 years of age


AFTA & ATAS and industry optimism


AFTA doing a good job and over 70% have implemented ATAS into their business

¾ The majority of all agents (67%) agreed that AFTA was doing a good job as an advocate for the industry and 74% of AFTA members surveyed

¾ 46% of agents thought that insolvency insurance should be part of the ATAS scheme,16% were unsure and 38% said it should not be part of the scheme

¾ 48% of agents surveyed said that suppliers should not support agents that were not part of the ATAS scheme and 21% were unsure

¾ 77% of agents have implemented the ATAS requirements in their business¾ Most agents are not taking out additional insurances as they say they are covered by

their buying group


ATAS members

¾ 65% of ATAS members surveyed thought that suppliers should not support unaccredited agents

¾ 35% will not take out insolvency insurance as its covered by their buying group


Some training still required at consultant level to fully implement ATAS

¾ There is still some training required to ensure ATAS is being fully implemented to consultant level with 15% of ATAS accredited agents consultants saying they have not been advised of the requirements and 27% unsure


Consultants view

¾ 62% of consultants worked in an ATAS accredited agency and 32% of consultants were not sure if their agency was accredited

¾ Of all consultants surveyed 35% had been advised of the ATAS code of conduct


There is a great deal of optimism and confidence amongst agents

¾ Over 90% of travel agency owner managers rated the confidence level in the industry as either Ok, good or excellent

¾ 84% of respondents believed they would be operating their business in five years time

¾ Some of the reasons are given below (A sample of actual respondents quotes)

¾ In the end and perhaps for the next five years, smarter agents will still be here with creativity and most of all by offering service. The other reason for the optimism is to have a broad range of products to sell, not just air travel. Smarter agents should consider Events, Conferences, Incentives, Inbound Travel (Leisure and Incentives). This will allow agent to survive should any one of the product mix suffers temporary downturn

¾ ATAS is elevating industry standards and providing a fresh opportunity for the future¾ lots of great experienced agents out there consumers need to be educated on importance of an agent or

wholesaler¾ Buoyant market conditions in mid to high end leisure and other niche activities¾ There are a lot of initiatives out there to get people travelling, and when people do travel they realise how

great it is, and people will continue to travel again and again and discover the world.¾ There is a lot of new technology on its way which will give us an edge. so much new product and easy

access to booking it - especially cruising. With the world political situation, using a TMC is an additional level of security for travellers.

¾ I feel there is a quiet confidence about the service we provide is always going to be required in this busy age, however you can't help to be cautious given the purchasing trend online

¾ Confident, professional operators create confidence for their clients. We must believe in ourselves.


There is a great deal of optimism and confidence amongst agents (continued)

¾ Whilst most were positive there were still some areas of concern and caution, as shown below with some actual respondents answers.

¾ Too many online providers, online sites and operators taking away from the job of a agent, airlines taking commission away form agents but reduced commissions and online bookings direct to customers

¾ Difficulty in recruiting staff, high salary expectations from inexperienced consultants, international fares are more complicated than ever (due to private fares)

¾ I feel that agents are being pushed out by airlines and hotels by trying to gain clients direct. I can compete with the online market because we offer personal service but how do you compete with a huge marketing machine like Qantas or any other airline with a huge database and they are targeting directly. I also feel that AFTA don't support agents but are more interested in supporting the airlines and themselves.

¾ Public have perception that agents are more expensive than going direct. Many Australian's are taking a "do it yourself" approach and booking with online overseas agents. No incentive for them to support local businesses.


Buying group issues


Owners feel buying groups are not delivering on lead generation or getting their members online¾ Agents valued overrides, training, support and marketing from their buying group

¾ Agents surveyed said their group did not support them with getting their business online or generating sales leads to the extent they would like

¾ Agents were supported by their groups in margin and commissions, education and training and support services


Most agency owners say they are happy in the buying group they are in now

¾ 90% of agents surveyed said they were not considering changing buying group

¾ 20% of agents surveyed had changed buying groups in the last 12 months

¾ Agents that did change (from a small sample) indicated the main reason for change was lack or transparency and that remuneration levels were better in a new group

¾ 85% of owner managers said they were not considering changing from their existing groups


What travel agents most value from their buying group

¾ Agents valued their buying group membership to give them;

¾ Access to overrides and contact with major suppliers

¾ Recognition through a strong brand supported by marketing

¾ Access to other agents with a similar mindset

¾ Assistance with insolvency insurance

¾ Support advertising and communication from suppliers

¾ Help desk offering

¾ A future strategy

¾ The major support given to agents by buying groups are the overrides and commission incentives and marketing

¾ There was some frustration expressed as few received support to become online enabled


How buying groups influence their members to sell preferred products

¾ Most agents will sell their preferred products as a first option

¾ Agents support preferred relationships and these relationships are the main reason they join a buying group

¾ Agents are critical of members of their group not supporting preferred as it has an impact on all in the group


Agents competing online


Online competition and participation dominate as biggest industry issue

¾ Most agents believe they are competitive with the web and most are developing a web strategy

¾ 30% of agents now have their own transactional site with their individual branding¾ As most agents believe that their buying group doesn't assist them in getting their

business online. Many agents are independently of their buying group developing their online strategy

¾ Most agency owners and consultants feel that they are competitive with the web

Owner Managers Consultants


Traditional wholesale models are becoming less relevant

¾ The traditional wholesale model is less relevant as agents and customers require more dynamic pricing and online platforms can provide direct connectivity to suppliers

¾ Agents said that traditional wholesalers were sometimes competitive with online suppliers and 15% said they were not.These attitudes are reflected in the growth of the number of agents using OTA’s where previously they used wholesalers

¾ Most agents have used OTA’s to make client bookings

Consultant views of wholesaler competitiveness


Retail agents are using new channels to remain price competitive

¾ More channels than ever before exist for agents to remain competitive with online pricing.

¾ Other than the options shown below agents said that;¾ If unable to find a competitive price on an on-line product they will book it and charge a service fee,

tell the customer to book it themselves online

¾ Some agents said they would match the price and add commission to another part of the booking to cover the earnings shortfall

¾ Speak to the supplier for a price match

¾ Often consumers obtain a cheaper rate online which is NOT what they originally requested and we try to make them understand that and more than often if we use dates/times of services offered to consumer at a cheaper rate, we find we are just as competitive

Owner managers Consultants


Expedia TAAP program as well as Travel Cube are the most popular among the online operators that travel agents are using.

Agency Owner Managers


Expedia TAAP program as well as Travel Cube are the most popular among the online operators that travel agents are using.

Travel Consultants


Consultant training, remuneration models, appeal of working from home and most important suppliers


A significant number of consultants are considering becoming home based

¾ 50% of consultants surveyed were either unsure or were considering becoming home based in the next 5 years

¾ The main driver for consultants wanting to work from home was flexibility of hours.


Consultants remuneration models have changed and employers are becoming more flexible

¾ In addition to the categories below a number of consultants worked for a commission share or commission split


Consultants continue to value educational and product training the most

¾ Over 75% of consultants surveyed rated their training as good or excellent¾ On an annual basis 65% had participated in a supplier educational’s, 45%

had been provided sales training and 82% had participated in product training from suppliers

¾ The most valued training courses for consultants is shown below;


Who are the most important suppliers to consultants

¾ The following were the most important suppliers due to the large number of transactions performed on each due to the product offering.

¾ Commission and override¾ Overall relationship¾ Customer preference

1. Qantas Airways2. Qantas Holidays3. Travel Corporation4. Singapore Airlines5. Emirates Airlines


Owners considering investing in technology,best cruise lines to deal with


Nearly 50% of owner managers are considering investment in technology for their business in the next 12 months

(Actual Agent Responses)

¾ A practical, down to earth, stable and easy to use system..... remember what GDS stands for? When it was invented, it was one set of entries for every airline, not 100 different systems for 100 different suppliers .

¾ I have seen the forthcoming Amadeus platform due to be released mid 2015, which is very exciting and I am very much looking forward to this, as it will help speed up numerous processes

¾ Mobile apps

¾ Ways to increase productivity; Easy access to multiple channels.

¾ One screen shop - it appears that consultants have to work harder for the same dollar. would be fantastic to compare all operators and providers in one area

¾ more integration with online booking engines, CRS etc. So many sites to sign in /out to compare pricing - time consuming.


Nearly 50% of owner managers are considering investment in technology for their business in the next 12 months (Contd..)

(Actual agent responses)

¾ Better accounting options for smaller business

¾ Easy on line booking and quoting systems, short video links. Tourist and destination video links

¾ The ability to have an interactive site that promotes our business module.

¾ Far better accounting package to control client management

¾ Assistance with converting our existing platforms to be compatible with the changing modes required by the changing technologies

¾ Better back office integration and better reporting.

¾ Better client facing reporting, Consultant reporting on preferred suppliers being utilised per Consultant basis


Consultants rate Princess Cruises the easiest to do business with and Silverseas provide the best overall commission


Owner managers rate Silver Seas as the easiest to do business with slightly ahead of Princess Cruises and Royal Caribbean



Australian Travel Agent Barometer 2014For further information contact

Simon Bernardi;Mobile: (+61) 418111484

[email protected] have a product specific or destination study developed for your organisation

or to partner or co sponsor a Barometer study please contact the author directly at the above contacts.

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