by Diego Cristobal, Strategic Account Director
Travel was one of the first industries to adopt digitization. And for the past 20 years we've been hearing about how technology will mean the end of the retail travel agent. It's my belief we're going to keep hearing these predictions for years to come. We're still a long way from the death of the travel agency, but there's a real pressing need for retail agents to adapt to the new reality of differentiation. This means effectively communicating their value proposition to their travelers.
It's this competitive element that interests me. As the travel market keeps changing, so is the whole concept of the high-street agent. So how can retail travel agencies give themselves the best chance of success in the coming years? In my opinion, these are the key factors for futureproofing retail travel.
The human touch is still a real edge
Even OTAs can clearly see the value of brick-and-mortar stores – Ctrip, for one, has been growing its offline presence for two years and plans to have more than 8,000 stores by the end of 2019[1].The human element is still hard – sometimes impossible – to replicate, and OTAs can struggle with this. As our Expedia Group CEO Mark Okerstrom has famously said, “We’ve had this mantra of putting the ‘A’ back in OTA and putting the ‘agent’ back in travel agent”[2].
All OTAs invest heavily in ways to cross-sell and upsell using technology that aims to influence behavior. This is inherently what retail agents do and a real strength of a human professional focused on sales and customer service. It comes down to providing confidence and addressing travelers’ concerns.
Dynamic packages are essential
The core product of many travel agencies and tour operators is static packages. In a destination that could mean contracting with 20 or 30 hotels for set room nights and packaging them up with specific flights. Maybe there'll be a hotel upgrade available, and maybe a little flexibility.
There will always be some demand for this kind of product, but retail businesses need to diversify to avoid losing ground to OTAs. With OTAs' ability to offer dynamic packages and integrate more lines of business – hotel, flight, transfers, activities, vacation rentals, car rental, rail tickets – there is a growing gap for retail travel businesses that aren't updating their supply. That’s where the power of partnering with Expedia Partner Solutions to offer dynamic pricing and package rates can really help meet traveler demand and differentiate a retail travel agent.
Choice, flexibility and savings are the standard set by OTAs; retail needs to meet it to remain competitive. That means competing from a product and price perspective, while also improving the online experience to better meet customer needs.
A clear point of differentiation is also more important than ever. Whether it's adventure travel, water-sports holidays, cruise, honeymoons, or corporate, specializing is vital for a retail agency to be discoverable and to compete. A basic offering should be viewed as a hygiene factor, but a specialism helps define a clear proposition that differentiates any retail brand. Combined with a strong web presence, this is the essential formula for a clear retail offering that can compete both on- and offline.
Speed to market is critical
This is where smaller, nimbler independent agencies have the upper hand – in being more flexible and adaptable in the face of changing customer demands. Larger agency networks sometimes face difficulties in adopting the new technologies and contractual changes to diversify. But change is needed, and innovating quickly – whether it's better booking technology or new commercial offerings, like dynamic packages – is critical.
We´re already seeing a move in this direction from CVC, the largest travel and tourism group of South America, with the acquisition of Almundo, a digital travel company previously owned by Iberostar. Their initial plans are to “adopt Almundo´s technology in other CVC subsidiaries in Brazil and Argentina” [3] providing them an avenue into new markets quickly.
Partnering is the future
Businesses that have the flexibility to adapt and a good understanding of their own strengths and weaknesses will be the ones that come out on top. Particularly for independent agencies, it doesn't make sense to try to confront all these challenges alone. Many retail agencies have limited resources to invest in technology. Rather than develop it themselves, there is the obvious route of sourcing suppliers, but there's also the cooperative model. The future of retail could see more independents banding together to pool resources. Combining individual agility with collective resources could be an increasingly powerful way for retail businesses to develop the technology and customer experiences that will safeguard their future continuing the trend of consolidation in the industry.
Looking to the future of retail travel the opportunity to differentiate and stay relevant is very real. But in a world with OTAs ever competing in price and relevancy one thing that remains is that humans buy from humans, and while that’s where the real opportunity is for retail travel, that alone is not always going to be enough.
[1] global.chinadaily.com.cn/a/201905/02/WS5cca3009a3104842260b982e.html/
[2] phocuswire.com/expedia-research-summit-mark-okerstrom
[3] valor.com.br/international/news/6374681/travel-group-cvc-buys-almundo-argentina-77-million
