Where is the future of travel agents?

A dead-end or a detour?

There is a great debate about the future of travel agents as it has become easier, faster and cheaper for consumers to buy their travel online. While the debate focuses on what can traditional travel agents can do to compete with OTA (Online Travel Agents) and survive in the industry, both are facing the same problem in the long-term: the declining perceived value of their services, the specialized information from which they derive their revenue, as that information becomes increasingly more localized, relevant and current on the Internet. Viewed from that angle, OTA are actually worse off than traditional travel agents as they compete within the same realm than the free specialized information lives in, while the traditional agents retain the advantage of the personal contact dimension with customers. But traditional travel agents face another problem: as there is nothing to physically deliver to the customer any more as tickets, hotel bookings and travel insurance contracts are all delivered electronically, there is no compelling reason for the customer to visit their store or office.

Legacy airlines in upheaval: Keep or ditch the economy class?

AirAsia in Thailand

Conventional wisdom says that the LCC (Low Cost Carrier) model only works for short-haul flights and cannot compete with the legacy carriers for the long-haul business. But most legacy carriers know full well that it is only a matter of time until they are challenged by the LCC on the long-haul. Already AirAsia X and Norwegian are demonstrating that conventional wisdom is wrong and that the LCC model is not limited to the short-haul business. Lufthansa is toying with the idea of creating a long-haul LCC to South-East Asia and India in addition to its regional Eurowings and its low-cost Germanwings. With Norwegian now offering low-cost service to Bangkok from northern Europe, it is obvious that Lufthansa would stand to lose some of their economy business to Norwegian.

The metamorphosis of travel and tourism

How much mass tourism can squeeze on an island?

In the short span of a generation, travel and tourism has gone through a sweeping evolution with everything becoming easier, faster with fewer intermediaries. Wheels on our baggage, paperless travel, booking a room on your smartphone while walking in the lobby of that hotel, bringing your own lunch aboard, etc. a multitude of seemingly small changes that together have created a new dynamic causing a metamorphosis in the industry.

The flow of tourism no longer originates exclusively from developed countries as emerging countries, historically only exotic destinations, became significant generating markets in the last decade. The emergence of low cost carriers and online travel services have sent traditional travel agents the way of video stores. Tourism is now a two-way street anyone can use, mostly, without the middleman. There is still good business to be had for the middleman with groups, MICE and highly specialized experiences, but in a different role of coordination rather than information and booking. Destinations and operators, once dependent upon travel agents in generating markets to bring them customers, are now reaching customers directly and taking bookings without intermediaries.

Income inequality and the travel class divide

There is an unmistakable correlation between the growing income inequality in society and the increasing gap in economy and luxury classes in both airlines and hotels. It should be no surprise being that tourism depends mostly on the disposable income that is most sensitive to income disparity.

On one hand, we have the extraordinary growth of LCC (Low Cost Carriers), the shrinking seats in the now spartan economy class of legacy carriers, the emergence of branded very low cost accommodation like Tune hotels (built on the AirAsia operating model) while on the other hand the airlines upper classes are getting more spacious, with better and bigger seats, with more amenities and services and 5-star hotels up their offering, refurbish to more lavish rooms and more services.