To read the Consumer Trends report, click here.
Among the hundreds of data points collected within the Travel Weekly Consumer Trends survey every year, there are three metrics that, taken together, can be viewed as predictive of sustainability of the retail travel adviser model. The three are:
1) How many trips are taken annually by agency clients vs. other travelers?
2) What is the average length of a trip sold by advisers vs. other distribution channels?
3) What is the average daily spend of traveling consumers who were counseled by professionals vs. those who did not get professional advice?
As long as clients who booked through travel agents continue to take more trips per year, take trips that are longer than average and spend more money per day than travelers in other channels, they will be viewed as valued partners by suppliers.
I call the difference among distribution channels on these three metrics "the advantage gap," and the size of that gap, channel by channel, is hugely important to suppliers as they weigh how much to invest in various means of distribution. As long as agents deliver the highest-value customers -- those who travel the most and spend the most per day -- they will continue to get strong supplier support.
The good news for agents (and the suppliers who rely on them) is that the advantage gap widened in travel agents' favor in all three indicators this past year.
Consumers booking through advisers took 4.81 trips, compared with an average of 3.93 trips for those who did not.
On average, trips that counselors touched were more than 35% longer (8.2 nights vs. six nights) than other bookings.
And agent-advised consumers spent $494 per day, vs. just $238 for those booking elsewhere. While the average daily spend rose for the agency channel, it actually dropped slightly for other consumers.
While the advantage gaps are impressive and positive for agents, other data uncovered by our research might raise anxiety levels among agent-reliant suppliers.
In light of the widening advantage gap, suppliers will likely be concerned by statistics showing a decline in the use of agents vs. other channels. For the third year in a row, the percentage of consumers who buy from travel advisers dropped. The decline hasn't been great in any given year; in fact, in each of these years, it has fallen within the survey's margin of error. But after three years, the aggregated drop does appear significant, having fallen from 25% to 18%.
News is also mixed for online travel agencies (OTAs) like Expedia, Priceline and Orbitz. Reviewing the data, the single change in consumer behavior that must provide greatest comfort to the OTA channel is the strong rise in the number of consumers who are booking on mobile platforms. That number has jumped from 23% in 2012 to 30% in 2013 and to 38% this year.
That represents a significant advantage for the OTA channel. Although most traditional agencies have an online strategy, relatively few have a mobile strategy.
The survey also shows that OTAs are most popular with younger travelers who make less than $75,000 annually. To be the preferred channel for the lowest-earning demographic is not anyone's preferred position, and that must factor into the "advantage gap" for traditional agencies.
Even so, it's nonetheless a demographic whose current booking habits could continue as their earning power rises in coming years.
Ultimately, any supplier plotting a future channel strategy can't ignore any of these trends, and currently both channels can point to unique market positioning and make the case for strong ongoing supplier partnerships.
For almost two decades now, many in the industry have viewed OTA vs. "traditional" agent bookings as a somewhat polarized channel war. But that view has masked a steady march toward channel convergence. OTAs have always employed large phone banks of live agent assistance, and the percentage of agencies without an online presence is now negligible.
The question has really become one of scale: large vs. small, rather than OTA vs. brick-and-mortar. The large, of course, have a resource advantage and can develop more robust websites, invest in mobile platforms and have a bookings-volume advantage when negotiating with suppliers. But the small retailer, as this survey demonstrates, has the advantage of delivering the more valuable, high-margin customer.
There is another aspect of the research -- almost a footnote -- that speaks to convergence, though not between online and offline retailers. Twenty-six percent of consumers who said they used travel agents had no idea whether their agent was home-based or working in an office.
That distinction appears to be less and less important to consumers, and it reflects how technology has, in many instances, made the ability to work from a home base indistinguishable from working within a more traditional environment. This convergence in perception enables all agents to equally contribute to, and benefit from, the widening advantage gap.
Email Arnie Weissmann at aweissmann@travelweekly.com and follow him on Twitter.
To read the Consumer Trends report, click here.
Methodology
The consumer trends identified in this report are the result of research conducted by the Warren Weiss Co. during the second half of May 2014, via a survey questionnaire that was distributed online to a representative sample of the general U.S. population. Qualified respondents had to be 21 or older and had to have taken one or more leisure trips that required an overnight stay in the previous 12 months.
A total of 600 respondents completed the survey. This sample size provides an overall margin of error of plus or minus 4% and allows for analyses of different subgroups.
Respondents were asked detailed questions about each leisure trip taken in the previous 12 months that required at least one overnight stay.
The remaining questions were general queries about travel booking methods used and satisfaction with them, amounts spent, usage and influence of travel review websites and social media and, finally, demographics.
To read the Consumer Trends report, click here.