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Thu 5 Jun 2008 04:00 AM

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Net losses

What travel agents must do to counter the internet threat.

What travel agents must do to counter the internet threat.

Travel agents must add value or perish - that was the stark message from British Airways' commercial director Middle East Paul Starrs on day three of Arabian Travel Market - 'Travel Agents' Day'.

Starrs was speaking at the 'Big ATM Debate' geared towards agents entitled: 'The future of travel agents and the development of online travel bookings', where he and six other panel members discussed how agents could compete in an environment where online bookings were growing so rapidly.

There is a role for travel agents but there is not a role for all travel agents.

Starrs noted that the message 'add value or perish' applied to every member of the travel industry whether a supplier, intermediary or travel agent.

He argued: "There is a role for travel agents but there is not a role for all travel agents", explaining how those who didn't add value to basic services provided online would not survive.

Starrs asserted that point-to-point travel and transfer journeys (DXB-LHR-JKF, for example) were easy travel transactions that did not require a travel agent and could be done easily online.

"But for complex journeys such as multi-sector, open jaws, or where more than one airline is involved, an agent is required," he said. "It's not something an airline would try to automate."

Starrs also argued that British Airways, via ba.com, better marketed its selling and servicing capabilities and revealed that 21% of the airline's Middle East bookings were now made on its website.

He also highlighted that while the remaining 79% of bookings came through the trade, when it came to special offers, 80% of sales were made directly.

"This is because we better market our deals to our clients than agents do to their clients," Starrs claimed.

"And how many travel agents offer their clients the chance to upgrade? Not many, because they think they have anticipated the client's needs [without asking them]. But on ba.com we offer that opportunity."

Although BA has now scrapped commission in all Middle East markets, Starrs stressed that the airline was keen to work with the following agents: Travel Management Companies (TMCs), a few online agents (Expedia) and those agents catering to niche markets such as premium travel, students and cruise.

"We are looking for agents that can specialise and seize opportunities to provide value to their customers," he said.

"Those that don't add value will perish, but those that do will flourish." Would anyone miss agents?

IATA's country manager Gulf Area Ibrahim Kamal started his presentation with a question: "If travel agencies became extinct, would anyone miss them?"

The debate of the era, he said, was how agents could compete with the internet, particularly with the advent of 100% e-ticketing and 0% commission.

"But from an IATA perspective, 75% of [global] airline ticket sales still come through travel agents, which amounted to US $187 billion in 2006," he said.

"So I believe the answer is clear - airlines do still need travel agents so agents will not become extinct."Kamal also promoted IATA's new WebLink site, which allows agents to tap into airlines' internet fares and sell and settle these direct transactions under IATA's Billing and Settlement Plan (BSP).

For more information visit www.iata.org/ps/financial_services/weblink.

Provide a service

Dubai Travel and Tour Agents Group (DTTAG) manager Leo Fewtrell outlined how the trade organisation was subsidising training to ensure agents were geared up to deal with internet challenges.

He noted that while the 'look-to-book' ratio was growing rapidly for online travel sales, the majority of travel bookings in this region still came through the trade.

"Online may be easier in some ways, but it doesn't provide a personalised service, expertise and accountability and it is not able to handle complex itineraries," he said.

"The consumer will use the travel agent as long as they provide a service that the internet can't provide."

Europcar Middle East sales manager Olivier Boucher concurred, adding that the future was bright for agents who added value.

"They need to be high-touch businesses," he said. "They must provide specialised and niche products and services to the market such as cruise, spa, etc."

His closing advice to agents was "Be bold - you must not be afraid of other distribution channels."

Travelport GDS vice president Middle East & Africa Rabih Saab urged agents to embrace technology.

He noted that the GDS systems he represented - Galileo and Worldspan - helped agents stay ahead of the game by providing a "one-stop-shop for global content".

Marriott also encouraged agents to use its dedicated agent website and re-affirmed its commitment to working with travel agents.

However, the company's director of eCommerce & Intermediaries - global sales, Middle East and Africa, Greg D'Souza, did note that Marriott.com's Middle East web sales were 21% of total sales and rising.

The online view

Expedia's director of market management, Middle East & Indian Ocean, Walter Lo Faro, also reminded agents of the power of the web.

The site, he said, boasted 1.36 billion users worldwide accounting for 20% of the global population. In Asia alone Expedia has 512 million users.

Expedia is due to enter the Middle East market with a dedicated website within the next year given that 17% of the region's population is online (34 million people) compared to 11% one year ago. Internet penetration in the UAE is highest at 38% and rising.

"This is where the Spanish market was three years ago," said Lo Faro.He also noted that Expedia was much more than a transaction tool.

"We have become a top media tool, so any travel supplier has a chance to put their space on our websites, with destination-targeted adverts, for example," he said.

Lo Faro also pointed to Expedia's virtual brochures and sister websites such as Trip Advisor that added value to the online proposition.

"We are going beyond the pure transaction to engage with social media such as facebook as we realise the media potential of our website," he added.

This may serve as a warning to agents that travel websites are becoming increasingly interactive and engaging the psyche and every day lives of consumers.

However, Lo Faro did agree with BA's Paul Starrs that there was only so far online services could go and that in the case of complicated itineraries, agents were essential.

Bricks or clicks?American Express regional group head of commercial products Mark Turner also stressed that agents needed to add value if they were to survive the internet age.

At his ATM seminar on day one entitled ‘Travel Agent Disintegration' he noted that the notion of ‘clicks versus bricks' was not just a Middle East issue, but a "global phenomenon".

His presentation outlined how in the last 12 years, travel agencies in more mature markets had changed their business models to adapt to a 0% commission environment.

In addition, they had been forced to compete with new distribution channels - not only the internet but call centres, supermarkets and television. The IT revolution, he said, had made the travel market more transparent.

"Today, the consumer has total access to every travel supply database," stated Turner.

He maintained that 49% of travellers in the UK gleaned information from the internet, before making their travel booking - a scenario that would be mirrored in the UAE where internet penetration is currently 38% of the population.

"But this is still low compared to countries like Norway, the USA or Australia, where internet penetration averages 70%," he said.

"These well informed consumers decide whether they buy their holidays and business trips in a shop or the internet - it's bricks or clicks."

Turner said that in order to compete with the likes of Expedia, agents must do more than just hand out air tickets.

"You are not selling tickets anymore, but knowledge," he told them.

This called for new business models and strategies he added, stressing that specialisation in niche markets was a winner.

Turner highlighted Canada where most surviving travel agents had found a niche in the market.

"Ninety-nine percent of the cruises sold there are sold by travel agents," he said.

He suggested that Middle East agents could cater to different customer categories noting that Muslims often travel in large groups whereas non-Muslims tend to travel alone or in couples.

"Hence they need different products and services and a different approach to consultancy," he said.

In order to specialise, agents must undertake training to build their product knowledge and customer service skills, Turner added.

Turner also stressed the need to charge a service fee: "If it took you two hours to get seats for a family on a highly demanded route, do you just hand over tickets or tell the customer what effort it took you to get them?" he asked.

"The acceptance of a service fee depends on this [service provided]. Creativity and the will to change are needed to succeed in the future."

By Jan-Aslak Stannies

Arabian Business: why we're going behind a paywall

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