Become a Home Based Travel Agent

Paradigms and the Travel Industry
By Tom Ogg

One of the benefits of having been in this business for almost 40 years is that I have lived through the travel distribution’s twists and turns. For the most part, virtually all of the paradigms have been set into motion because of advances in technology. However, it was never obvious when a significant change was in its infancy, as there was only widespread confusion and disorientation that precluded the transformation yet to come. Those that recognized and understood the emerging model early on generally did quite well, those that were late, did not.

When I first got into the travel industry, travel agents used OAGs (a book of airline schedules and fares) as their computers and would call the “agency desk” at the airline they were booking. They would then hand-validate the airline ticket with their agency plate and the airline’s plate (much like a hand validated credit card sale used to take place). The agent would then handwrite the airline ticket, collect the funds and complete the transaction. Vacations were sold with “10% tax and service” added as the travel agent’s commission, but provided pretty much the same service. All in all, travel agents made their living both documenting and settling transactions on behalf of their supplier partners.

All inclusive pricing, satellite communication, the CRS, e-ticketing, direct settlement, inflation, personal computers and short haul, hub and spoke regional airlines and networks all created paradigms in their own right. But, it was the double whammy or the commission caps, cuts and final elimination along with the evolution of the World Wide Web that created the most dramatic paradigm in our industry. Tens of thousands of agents walked away from their brick and mortar storefronts and went home-based.

Web 2.0 brought with it a paradigm that not only affected the travel industry, but the distribution of products and services worldwide.  Peer to peer networks enabled consumers to research an increasing amount of content and changed the way consumers navigate the purchase of complex leisure travel products and services. Commodity oriented travel transactions matured on the web and promised an evolved sense of becoming a mature channel.

Today, United Airlines is refusing to allow some travel agents to process airline credit card sales made by the agent through United’s merchant account. This puts agents not only in a non-commissionable position, but with a higher cost proposition that must be passed on to their clients, if they continue to use the agency. The client can book directly with United and use their credit card with no additional cost. United perceives the merchant fee associated with the travel agent sale as an “additional cost”. The message is clear.

Today, Travel Trade, a well known and respected trade publication ceased printing a magazine that has been a cornerstone for travel agents for 80 years. While the message isn’t as clear on this, one must sense that something is not right.

Today, Companies are going out of business. Well established companies with substantial investments in their brand and infrastructure. Organizations that should be rock solid are closing their doors by choice. Sure the economy is not good, but what is really going on?

Folks, I have seen enough change in our industry to know that we are on the cusp of a huge paradigm that will affect all of us. It will affect the way that we do business, the way clients purchase travel and even the very nature of travel distribution itself. While I have no idea how this will manifest itself (and I don’t think many people do at this point) I can define some of the key components of the coming paradigm.

Search: Google has revolutionized the way consumers find information. Back when I first got into this business, travel agents were the primary source for information regarding travel. Today, any consumer can find out about a travel event they are considering by accessing the search functionality of the web. And search is only going to get more definitive, rather than less. In the future, a client wanting a transfer from His hotel in Barcelona to a specific train station in Barcelona will be able to identify what they want using keywords and viola, all the options will be there. Search has already changed the very nature in the way consumers think about information. Where once consumers relied upon travel agents to “search” for results using their knowledge and other resources, today clients can search for themselves.

Communication: When I first started in this business, there was no internet, no email, no VoIP, no satellite communication networks, no cell phones and no toll-free telephone numbers. Consumers used travel agents to communicate with suppliers using their telephone and telex machines. Today, anyone with a computer and broadband access can communicate with anyone else on our planet for FREE. Global communication has changed the way consumers think about and access travel related products and services.

Settlement: One of the reasons that travel agents were so successful when I first got into this business was because they were the point of documentation and settlement for the airlines and other suppliers. Airlines paid travel agent’s commissions, because they could not service the client themselves. They needed someone to write the ticket (documentation) and collect the money (settlement) on their behalf. The only alternative a consumer had was to go to the airport and stand in line at the airline’s ticketing counter. This was the same for the tour companies, cruise lines and other suppliers who relied on the travel agent for documentation and settlement. Today, suppliers can both document (e-tickets and e-docs) and settle (direct credit card sales) their transactions.

Global settlement processes across currencies such as PayPal, Google Check-Out and Xoom have made it possible for consumers to settle with even the smallest vendor located a half a world away safely and efficiently. Where once the travel agent was responsible for settling travel transactions, it is clear that this function is no longer necessary from the consumer’s perspective.

Social Media: Niche social media has turned global communication upside down and will continue to evolve into a major communications network upon itself. The power of social media lies in its intrinsic ability to communicate instantly with millions of potential customers. The viral nature of social media ushers in a new stage on which travel will be a hot topic.

We have already seen the consolidation of these components in companies such as EBay, Google, Microsoft and Yahoo. Companies such as Craigslist.com also point to the potential future for travel distribution. However, it is the unknown that we all wonder about.

I can clearly see someone deciding to purchase a sightseeing activity directly from the supplier, settling with one of the on-line settlement processes, communicating via email, VoIP or through an niche social media site and bypassing the traditional distribution system.

So the question becomes, “How can we, as travel agents, cash in on this new paradigm?”