Airbnb has taken the hospitality world by storm. The site allows travellers to book rooms in private houses and launched in New Zealand in June. According to Stuff.co.nz, New Zealand travellers are expected to book almost 500,000 nights through the online accommodation site this year – without the help of an agent.
Global travel booking portal Expedia entered the New Zealand market in 2007. Its then-MD Arthur Hoffman said the New Zealand market was worth more than US$17 billion.
Through the site, Kiwis can make bookings for more than 75,000 hotels, flights from all major airlines, car rental companies and over 3,000 activities and attractions around the world. Expedia says more than 50 million people visit the site each month.
These online portals are easy-to-use and direct, as are many providers’ websites – just look at Air New Zealand’s booking system.
However, it looks like Kiwis aren’t ready to abandon their travel agent just yet. In BNZ’s Marketview report for the week ending October 23, spending on travel agents was up by 6.2 percent – one of the three largest rises for that week.
Andrew Gay, managing director for STA in New Zealand and Asia, says travel agents remain crucial to STA’s business model. More than 80 percent of STA’s business is transacted in stores.
Many STA stores are located in malls, and Gay believes this steady stream of foot traffic helps keep demand up. Eighty five percent of people who come into STA stores have shopped around online first, Gay says: “They’re definitely more informed, they’re doing more research… but they still value experience.”
All of STA’s staff are people who have travelled and who sell travel, Gay says – not people who got into the travel agency straight from high school. He feels that their advice is a big part of why customers choose to book with agents rather than directly.
Gay disputes the perception that it’s cheaper to make travel bookings directly rather than through an agent. Travellers taking the DIY route tend to trip up when their journeys become complicated, he says.
“There are so many round the world fares that travel agents get that are impossible to piece together with an online engine,” Gay says.
Accommodation is easier to DIY, Gay says. STA’s website does offer a similar experience to online booking portals, and it has recently released an app allowing customers to book hotels through it while on the go.
Gay says it’s when something goes wrong that travel agents come into their own. Customers like the safety net of being able to come back to a travel agent if their holiday goes pear-shaped, and Gay says the younger travellers that STA targets particularly appreciate an experienced agent’s valudation: “They hear, ‘You’ll be fine, this is what you should do.’”
Flight Centre managing director Chris Grieve referred to independent research the company conducted in August this year through The Street when he was asked about the relevance of travel agents.
The research focused on consumers’ preferred methods of contacting travel agents and interacting with them rather than addressing the broader question of whether they wished to consult travel agents in the first place, but it broadly echoed Gay’s perspective on physical stores.
Of the 839 respondents who participated in Flight Centre’s research, 70 percent preferred to contact a travel agent by walking into a physical store. A further 34 percent liked to email their agent and 27 percent wanted to talk on the phone.
“At Flight Centre we are acutely aware of the need for travel retailers to stay relevant and so we have made a conscious effort to model our business on the needs of our customers,” Grieve says. “At the forefront of this is ensuring they are able to speak to us when and how they want.”
He says Flight Centre has invested heavily over the past few years in its “blended access” model, which offers customers more flexibility in accessing travel agents and booking travel.
Grieve offered online “consultant selection” as an example of an added-value service the company can offer. Each customer is assigned their own “travel expert” as they go through the booking process online, and can choose their preferred expert if they like. It has also introduced “Red Label Holidays” which caters to evolving consumer preferences by offering upgrades and extras for no added cost.
“There is certainly still a need and want for travel retailers and Flight Centre’s record results from 2014/15 show it is definitely still profitable,” Grieve says. The company’s net profit hit A$256.55 million in the year to June 30 2015.