Are OTAs really killing brick and mortar travel agencies?
When the first online travel agency (OTA) emerged on the newly minted World Wide Web in 1994, many travelers shunned it.
The prospect of entering a credit card number into an online booking site was foreign and suspicious. Plus, there was no benefit to making trip arrangements on Travelweb.com versus through brick and mortar agencies or directly with hotels and airlines.
Fast forward 20 years and OTAs dominate the minds and wallets of many travelers. But just how big of a dent have OTAs actually put into the more traditional model of offline travel bookings?
The Death of the Travel Agent
According to a CNN report from 2013, the number of travel agencies in the United States has declined from about 34,000 in the mid-1990s to 13,000 or so at the time of the report.
While these numbers don’t factor in travel agents who now work from home independently or agencies that no longer sell through an Airlines Reporting Corporation (ARC) number, most people tracking the travel industry can agree: There are far fewer agencies in the U.S. now than there were 20 years ago.
Why Are OTAs So Appealing?
From better prices to convenience, brand recognition to loyalty programs, travelers are booking online because it offers more benefits.
A study conducted by Google in 2014, “The 2014 Traveler’s Road to Decision,” found that one-third of leisure travelers and half of business travelers select an OTA for its site tools and options. People like to compare travel options, quickly, and in this arena brick and mortar agencies cannot compete with OTAs.
In the same Google GOOGL -0.53% study, more than 75 percent of leisure travelers reported using an OTA because it offered the best travel deals. Similarly, SDL reports that consumers are overwhelmingly concerned with price over loyalty programs and rewards.
Globally, only 9 percent of surveyed travelers responded that they always consider loyalty rewards when they book a trip. This is bad news for brick and mortar agencies reliant on pushing frequent flyer miles or other loyalty incentives.
Quite simply, and of no surprise to anyone, online booking is easier and leaves travelers spoiled for choice. From aggregators like Kayak.com, which merely assemble inventory from other websites, to travel sites like Flights.com, most travelers agree that online booking is just more efficient and cheaper.
Surviving Brick and Mortar Outposts
Before assuming the world of brick and mortar agencies is heaving its final breath, consider this: In places like Australia, some reports suggest that travelers prefer in-person booking in many scenarios.
As recently as 2014, Ray Morgan Research reported that nearly 50 percent of Australians traveling overseas used a travel agent, not an OTA. By comparison, the SDL report mentioned earlier found that a measly 5 percent of U.S. travelers book in person with an agent.
In Europe, the trend toward OTAs may not be as swift as it’s been in the U.S., but the transition is steadily happening. According to IPK International’s World Travel Monitor, in 2008 a full third of trips in Western Europe were booked with a travel agent, but only one in five trips were booked by an agent in 2012. Germany appears to be the lone holdout in the region, maintaining a much higher percentage of agency-booked travel than neighboring countries.
It’s not only geography where the success of brick and mortar business has put its flag in the sand. Certain types of travelers lend themselves to working with a traditional travel agent.
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