Travel Agent NewsSigns of changing consumer preferences favouring digital already evident even before the pandemic, GlobalData research show.

Is this the end of the in-store travel agency as we know it?

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More brick-and-mortar agencies are transiting operations online, a necessary move to stay relevant especially in Covid times.
More brick-and-mortar agencies are transiting operations online, a necessary move to stay relevant especially in Covid times. Photo Credit: Getty Images/DragonImages

The transition of the in-store travel agency to online may have been accelerated by the pandemic, but signs of changing consumer preferences favouring digital were already evident before that, according to data and analytics company, GlobalData.

Johanna Bonhill-Smith, travel & tourism analyst at GlobalData, said: "The long-term survival of in-store travel agencies has been discussed for several years due to the rising popularity of online bookings. Success in 2021 will largely depend on good levels of cash-flow, an area in which online travel agents (OTAs) continue to be a step ahead of traditional brick and mortar style agencies, thanks to their asset light business models."

According to an in-house 3Q 2019 survey polling 29,744 global respondents, only 17% booked with an in-store travel agent, pointing to the decreased popularity of booking at a travel agency's store even before the pandemic.

Results remained the same in a December 2020 survey, which found that 47% of global respondents would buy more products online rather than visiting a store and 60% would do banking transactions online in the 'new normal'. Answers came from 5,766 respondents over 2-6 December.

The pandemic merely accelerated the consumer behavioural shift.

"Lack of revenue and high demand for refunds has taken its toll on many traditional travel agencies. High fixed costs including high street rents would have depleted cash reserves further for in-store agents in comparison to OTAs. Store closures were considered essential for many to simply stay afloat during 2020 and some have been made permanent," added Bonhill-Smith.

One of these permanent closures is STA Travel, a long-haul flight specialist with more than 50 shops in the UK. STA's Singapore store stopped operations on 9 September. Similarly, Flight Centre closed 421 out of 740 of its stores in Australia last year.

Hays Travel on the other hand is choosing to do a 'hybrid return': with some shops reopening, and others remaining closed, as the agency awaits further news regarding the UK government's recovery roadmap.

Still, with staff increasingly comfortable and reporting that they are happy to work from home, more in-store travel agencies may continue shutting its doors. Tour operator TUI has announced it will close a further 48 branches this year, adding to the 166 already shut down in 2020, as the brand moves its operations online, and leaving around 314 brick and mortar shops open.

According to cruise line Royal Caribbean International (middle on left, seen here at CruiseWorld India), going digital is less time-consuming, with the length of traditional voice calls dropping from 35 minutes to eight minutes.
According to cruise line Royal Caribbean International (middle on left, seen here at CruiseWorld India), going digital is less time-consuming, with the length of traditional voice calls dropping from 35 minutes to eight minutes.

Singapore's digital act

In Singapore, the number of travel agent closures since February 2020 was recorded at 22 by September last year, the low figure probably attributed to operators going into hibernation and kept afloat by the government's various support schemes.

A new wage subsidy for tourism, aviation sectors was announced in February at the 2021 budget statement in parliament, with more tourism funding top ups again announced at the Tourism Industry Conference (TIC) on 7 April.

For cruise line Royal Caribbean International (RCL) — one of the two cruise lines which have resumed sailings on Singapore's waters — there are even numbers to support the switch to digital.

At the recently held CruiseWorld India for local agents, Varun Chadha of Tirun Travel Marketing speaking for RCL said: "[Previously], our telephone conversations lasted about 35 minutes, but the minute we invested in digital those conversations went down to nearly eight minutes — which shows the kind of efficiency you can get.

"Digital is where people are finding us, asking questions and even booking."

This is in line with the Lion City's push for digital, with launches such as the Singapore Tourism Accelerator programme in 2019, enabling international partnerships despite travel restrictions, while also helping drive digital transformation to help the local tourism sector adapt.

To Bonhill-Smith, it's all about a survival of the fittest.

"The rollout of vaccinations worldwide, coupled with the supposed release of digital vaccine passports, has offered a beacon of hope for the travel sector. However, the news of new variants of Covid-19, coupled with ongoing lockdowns across Europe, suggests 2021 will still be a year that is far from normal.

"Traditional in-store travel agencies have been increasingly under pressure to develop their online directories to remain competitive within the global marketplace. The lower the fixed costs for travel agencies, the greater flexibility they will have in servicing the future travel space. Therefore, more shop closures are likely to follow as we enter the so-called 'new normal'."

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