Some day, travel agents may become as antiquated as in-flight meals in coach class.
Thanks to Internet travel sites like Orbitz, Travelocity and Expedia and cuts on commission by the airlines, travel agents have had to reinvent themselves to survive — or go out of business completely.
“It’s a very tough time for travel agents,” said Michael Greenwald, co-owner of Personalized Travel (www.personalizedtravel.com) in Oakland Park, Fla. “There are lots that have merged, gone out of business or changed their way of business.”
The number of retail travel agencies has nearly been cut in half in the past five years, from 46,659 in 1998 to 24,000 as of March 2003, according to the Airlines Reporting Corp. (search), a financial clearinghouse between American travel agents and airlines.
The American Society of Travel Agents (search) (ASTA) estimates that the number of member agencies has fallen from 12,000 to about 9,000 over the past decade. Many struggling agencies have opened businesses in large corporations or consolidated with other small firms to stay afloat.
But ASTA president and CEO Richard Copland said most of the decline is in small “mom-and-pop” locations, and the number of travel salespeople has actually risen — to between 50,000 and 100,000.
“You’ve had a reduction in brick-and-mortar locations,” he said. “But you have a growing army of sellers of travel. The vast majority do their work at home.”
Greenwald is a case in point. After the downturn — which began when airlines started trimming agents’ per-ticket-commissions in 1995 and continued through the rise of the Web, the wars and the economic slump — he shut down his Washington, D.C., travel agency and moved operations to the Ft. Lauderdale area.
“I said, the heck with this, and I took my business home,” he said. “I work out of my house now.”
Before 1995, the airlines paid travel agents commission fees of about 10 percent per ticket sold. That year, incentives dropped to 8 percent and continued to shrink until the rate hit zero about a year ago.
Airlines still pay performance-based commissions to larger travel agencies that meet certain conditions and sales expectations, according to Copland, but the per-ticket rewards are a thing of the past. That has led to some animosity between airlines and travel agencies.
“The airlines decided they wanted to get greedy and started cutting our commission. They chiseled away at us till there was nothing,” said Nadine Faro, a travel agent for 25 years in Bergen County, N.J. “The airlines are trying to force us out of business.”
Because of the cuts and changes, many travel agents have begun charging their clients fees.
Greenwald now charges $75 to plan a vacation for a client, $41 to book a domestic flight and $61 to book an international one. Faro — who has been forced to hop from one closed-down agency to another in the last several years — said her firm charges $20 for an airline booking.
These days, only 26 percent of U.S. travelers say they use a travel agent, as compared to 32 percent three years ago, according to the Travel Industry Association of America (search).
Travel buff Ellen Prince of Philadelphia last used an agent in 1997 and vows never to go that route again.
“I was disgusted with travel agents,” said Prince. “I love the Web for travel arrangements.”
Prince used an agency six years ago for an African vacation, but when the agent asked her what to do when internal flights were canceled last-minute, she decided to go it alone.
“I took to the Web,” she said. “Everything I had booked worked out perfectly.”
Other trip planners mix travel agency use with Internet bookings. Gregory Hillyard of Media, Pa., said he and his wife go to their agent for new vacations but hit the Web when they return to places they’ve been before. Their reliance on agents has dropped from 100 percent to 50-75 percent, he said.
“If it’s something we’re unfamiliar with, we’ll go through a travel agent,” he said. “But if we know where we want to go, (the Internet) is so easily accessible. It’s more exciting when you book it yourself. It’s 100 percent your vacation.”
Online travel agencies in the U.S. posted gross bookings of $14.9 billion in 2002, a 52 percent increase from the previous year, according to a study by travel analyst Phocuswright (search).
“The Internet has introduced lower cost to consumers and brought greater convenience,” said Kendra Thornton, Orbitz media relations manager. “Travelers really can find better deals online. And we’re always open for business.”
But other findings in the 2002 Phocuswright survey showed travelers didn’t save a significant amount of money or time by booking arrangements online. And many agree that agencies are still needed for cruises, packages and other complex vacations.
“If you get into some kind of a problem, you have somebody to come back to immediately,” Greenwald said. “We can take care of it.”
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