New Challenges and Opportunities for Travel Agencies

By Martina Groenegres, Managing Director at Lufthansa City Center International

Though travel is strongly coming back in most parts of the world, the customers have changed and global market challenges and trends are forcing travel agencies to adapt.

According to the recent UNWTO publication, almost all travel restrictions are lifted, and international travel saw a very strong rebound in 2022. Apart from Asia, the world is about 75% of of pre-COVID visitor figures. The past three months alone were a lot stronger than compared to 2019.

But are we back to a 2019 travel industry?

Not at all, I am afraid.

The world around us has changed, and I would like to share my personal industry trend watch with you.

1. The Challenges

The challenges around us have increased. Most countries in the world have learned to live with COVID-19, but it is not over yet. Our broken supply chains are far from being back on track. The inflation is high, the energy crisis has hit Europe, and the labour shortage and fears of recession are visible everywhere. Even worse, the nature has shown us the limitations of growth. We have experienced heat waves, draughts, fires and floods—in almost all parts of the world.

Those past two and a half years was a game changer for our industry and has also changed the behaviour of our customers, our employees and all of us.

2. The Customers

According to Accenture’s “Life Reimagined” report, 50% of all participants have said that the pandemic has caused them to rethink their personal purpose and re-valuate what is important in life. This is a very large figure, which means every second person we come across has made some life re-evaluation.

From Google comes another study on shopping behaviour showing that increasingly, shoppers are putting their money where their values are—whether it is sustainability, corporate responsibility, or racial equality. Search interest for “ethical brands” and “ethical online shopping” grew 300% and 600% year over year in 2020, respectively.

This changing customer behaviour requests changes from the travel industry, and we will look into this one by one, with focus on the  opportunities that every change and crisis brings along.

3. The Opportunities

We all know that we will not be able to change the winds, but we can adjust our sails. We have many examples how some travel businesses turn challenges into opportunities and I will share them with you.

a. Workforce and Global Demographics

After being furloughed for quite some time, many of our employees have turned to other industries. This great resignation resulted in staff shortage in all parts of the travel industry—airports, airlines, hotels and travel agencies in most parts of the world.

Though business is strongly coming back and travel management companies (TMCs) are overwhelmed with work load, extensive hiring is risky given the high salaries and fears of recession.

So what solutions do travel companies in our network have in order to overcome the shortages?

They intensified their collaboration.

Technologies like Internet of Things (IoT) have allowed trans-continental exchange and joint customer servicing. Remote support teams have been set up between Singapore and the Philippines, Vietnam and Germany, Belgium and Ukraine, Italy and Albania and the list continues. There are 92 countries to develop creative ideas with—in order to overcome staff shortage and this creative power has now been unleased.

But let’s face it: The long-term trend of globally shrinking workforce due to aging population and demographics is just beginning. All continents’ populations apart from Africa are already decreasing.

The topic of staff shortage topic thus will stay with all of us for a long time, and the success in attracting and retaining talents will strongly depend on the company’s ability to balance between the wishes of the staff and needs of the company’s business itself. Remote Work concepts and Social Responsibility approaches are the propositions to convince candidates to join. Also, remote work opportunities enable international talent exchanges that will then attract more potential employees. I trust this will foster employee’s loyalty tremendously.

b. Automation and Efficiencies

What else can we do to get around with the labour shortage? I think we can only turn to more digitisation and automation to gain higher efficiencies. There are some good signs out there: we have seen online adoption rate of online booking engines (OBEs) and self services by corporate customers have gone up during the crisis. This is to meet the rise of customers’ demand for self service anytime, anywhere. It is, also, an opportunity for us to reduce our workload.

However, though moving toward automation, let’s not forget that travel and hospitality still require the human touch. The past two years have shown that the customers need more support from us than ever before. The industry has to strike a fine balance between human-delivered customer services, and the efficiency gains from technologies like automation.

c. Improve Your Bottom Line

Duty of care and travel disruption management take time, and we as travel agencies have to constantly remind ourselves that our time costs money.

Many companies that have never used the TMC services before now want to use it. These companies are typically those that are not able to manage the complexity and uncertainty of duty travel on their own, especially in times of COVID and post-COVID. This is an opportunity for travel agencies, and we should focus on how we can improve our bottom line by charging for our time being spent rather than only for transactions.

d. Leisure Opportunities

Now let’s look into the leisure opportunities. The world has opened up and in many countries there are no entry restrictions any more. People want to travel no matter what.

They have saved money over the past two and a half years and now want to indulge themselves. Travel companies need to capture this opportunity to promote new destinations, create new services and ultimately diversify and broaden their revenue streams.

e. Sustainability Positioning

We cannot disregard the limitations of our nature any longer. Young customers, in particular, want to feel good in terms of ecological footprint when going on vacations. Agencies have to be familiar with CO2  calculation and offsetting.

Today we still see a “SAY DO GAP” when it comes to sustainability. The term refers to a disconnect between reported sustainability behaviour and actual behaviour: what people say they do is not what people truly do.

Nevertheless, I think customers will expect that agencies give them the option to do good for the nature. This will change our tourism product portfolio and how we communicate our services to the customers.

f. Reach Your Customers

We have to be where our customers are, and many of them are on social media. A few travel agencies are quite advanced and have more than 200,000 followers. What an opportunity to talk to the customer base!

However, many of us are not where we want to be. To get better every day, travel brands have to put more focus on digital marketing.

4. Final Thoughts

As we all know history would never turn back—it will always move forward. The travel industry, therefore, is moving forward as well, and we look at both the challenges and opportunities. We need to constantly re-evaluate our roles and what values we can bring to customers in order to build our future together.

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