Is IT ruining travel agents?

Since the rise of interactive travel, there’s been a lot of talk about a corresponding fall for traditional travel agencies. But the evidence of retailer ruin hasn’t been quantifiable – until now.

A recent series of focus groups conducted by Preview Travel suggests that most travelers would gladly dump their human agent, presumably in favor of an electronic replacement. A similar study by Pegasus Systems Inc. charts a steady decline in hotel bookings through traditional channels. And the folks at Forrester Research agree that the commission-hungry middlemen are on the skids.

The numbers are starting to support my long-held suspicion that agents are losing ground to interactive travel. Last week, my own American Express-affiliated “real world” travel agent slapped an unexpected $3 “non-refundable handling fee” on my ticket without a warning. Since I’ve been writing about the virtues of a virtual agent for nearly two years in this column, it is probably time to put my money where my mouth is and defect to cyberspace.

It looks like I’m not alone: the online travel market is expected to top $827 million this year and mushroom to more than $4.5 billion by 2000, according to Jupiter Communications, New York. Have we stopped to ask ourselves at whose expense this growth will come? Survey says: travel agents, that’s who.

Seema Chowdhury, an analyst with Forrester Research in Cambridge, MA, might not put it so bluntly, but she wouldn’t disagree. “The research we’ve done suggests that people aren’t particularly loyal to their travel agents,” she says. “They’re very receptive to online bookings. Consumers are willing to try something new.”

There’s more good news for interactive travel as a whole, says Chowdhury. In discussing recent efforts by airlines to pare online commissions, she says, “Cutting commissions isn’t enough” to drive all online agencies out of business. When a carrier tries to cap the number of booking engines, “You end up with concentrated distribution channels on the Web, which will then have the clout to negotiate the commissions back.”

The Pegasus poll is equally compelling. The soon-to-be-public company tracked hotel bookings over a six-month period last year and found that bookings through travel agents slipped by 1 percent, while Internet bookings rose by a corresponding amount. A similar survey points to an annual rate of decline of between 2 percent to 3 percent for travel agent bookings. Over a decade, such a slow hemorrhaging of business could really hurt retailers.

Karin Wacaser of Pegasus sees another trend in the research-direct bookings moving from the telephone to the booking engines. “We’ve been targeting those direct booking numbers, trying to get the people who usually go to the phone to change their booking habits,” she says.

But direct bookings of either type-by telephone or through booking engines-are up. The number of direct calls to hotels rose by the same amount as online bookings, according to the Pegasus research. And another Pegasus study showed an 11 percent shift from telephone bookings to online bookings between mid-1996 and the end of the year.

The results from Preview Travel’s focus groups, which were held when it overhauled its site a few months ago, seem to imply that agents are only at the beginning of their long slide into irrelevance. It found that a startling 95 percent of respondents wouldn’t think twice before jettisoning their travel agent. “This is not to put down travel agencies, but I think that we all knew this, intuitively,” said spokesman Ron Pernick. “People are not happy with the current way they are buying travel. They are not satisfied with the traditional channel.”

Few people are, except perhaps those who stand to gain from keeping things the way they are.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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