The Travel Agency Business

The Changing Face of the Travel Agency Business - Tnooz

Excerpt from Tnooz

Online travel agents (OTAs) have nearly obliterated the travel agency industry that was once responsible for booking tickets and hotels.

Or so you may have thought.

According to Statista, the travel agency business is booming with the industry expected to rake in nearly $17.3 billion dollars in revenue by 2020; up from 12.2 billion in 2010.

A major chunk of revenue continues to come from commissions and service fees. But the source of these commissions has been changing over the years. When airlines stopped paying high commissions back in the 1990s, travel agents started to lean heavily on add-on services such as hotel and transport for commissions.

With services such as Airbnb and Uber now available in almost every major city, commissions from these services too are likely to dwindle in future.

At present, travel agents depend on two categories of travelers for their revenue. A good number of corporate business travelers still rely on partner agencies for their tickets. In the consumer segment, holiday packages and custom itinerary planning services have been taking off with an increase in international holidaying. The drop in commissions is mostly made up for by the corresponding rise in the scale and value of such bookings.

This is however not a long-term fix. A number of startup online itinerary planning services are already making a mark and a number of OTAs today offer holiday packages on their websites.

The travel agency industry is already in consolidation mode with larger players constantly acquiring smaller and niche TAs to increase market share. The future of the travel agent depends on innovation.

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