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Are travel agencies going out of business?

14 Sep 2022 8 MIN READ

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Are travel agencies going out of business?

If you’re someone who travels regularly, whether it’s for work, a weekend getaway here and there, or even a yearly family vacation, it’s likely you may have used a travel agent at some point.

But for a lot of people, travel agents might seem like a thing of the past. Online travel booking platforms like Expedia and Airbnb have exploded in popularity in recent years. Instead of contacting their local brick-and-mortar travel agency to book their trips, many travelers now use these online services to do it themselves.

Does this mean traditional travel agents are doomed to fail in the coming years?

The coronavirus pandemic and its impact on the travel industry can offer us some clues.

How the pandemic has impacted travel agencies

There’s a huge contrast between how the pandemic affected travel agents initially, and the impact it had in its second year. First, there was disaster, then there was a resurgence.

Early pandemic

When the pandemic first hit, the travel industry was one of the worst affected. Lockdowns, travel restrictions, and bans on international travel meant demand for travel services became virtually non-existent. Cruise lines stopped running, airlines canceled flights, and people had to cancel all travel plans. This had obvious knock-on effects for travel agents.

Plummeting revenues

According to a survey conducted by the American Society of Travel Advisors (ASTA) in August 2020:

  • 93% of travel agencies reported business income down at least 75%compared to 2019.
  • 78percent reported that income was down 90% or more.

These drops in revenue were all pandemic-related.

Major downsizing

That same survey also found that:

  • Of respondents with W-2 employees at the start of the crisis, 75% had laid off or furloughed at least one employee, but most had laid off more.
  • More than 43% said that they had laid off or furloughed three-quarters or more of their staff.
  • More than 16% said that they had laid off or furloughed between 50 and 75% of staff.
  • Nearly 9%had laid off or furloughed 25-50%of staff.
  • Only 7%had laid off or furloughed less than 25%of their employees.

Store closures

A number of large travel agency businesses were also pushed to close many of their physical stores during the pandemic:

  • Australian travel agency Flight Centre closed 421 out of its 740 stores.
  • German tour operator TUI closed 166 stores throughout the UK and Ireland in 2020, and a further 48 in 2021.
  • British travel company Hays Travel closed 89 of its stores following the UK’s third national lockdown in early 2021.

Big companies going bust

Beyond just closing physical stores, some high-profile travel agents were forced to cease trading completely because of COVID:

  • STA Travel, a UK-based company that specialized in trips for young people, including gap years and volunteer projects, was forced to close in mid-2020. STA had more than 50 shops throughout the UK.
  • Upside Business Travel was the first major business-focused travel agent to go out of business when it ceased operations in 2021.
  • Business travel management firm Lola was also forced to close in 2021.

2021 Resurgence

Clearly, the early pandemic hit travel agents hard. From small businesses to some of the biggest names in the industry, nobody was left unharmed.

However, as 2021 progressed more people became vaccinated, and travel bans were lifted. Increasingly, travelers started turning to travel agents to help them navigate constantly changing COVID rules and travel restrictions. In the cases where restrictions caused cancellations, travel agents could help them get refunds for airline tickets, cruise ships, hotels, and package holidays.

Many travel agents suddenly started seeing a huge surge in business, even compared to pre-pandemic levels:

  • According to a poll by ASTA in March last year, 76% of travel agents saw an increase in customers in 2021 compared to before the pandemic, with 81% saying they were hearing from customers who had never used a travel agent before.
  • This poll also found that more than one-quarter of travelers (27%) always or often used a travel agent prior to the pandemic. But nearly half of travelers (44%) said they were more likely to use a travel agent after the pandemic is over.

This resurgence would suggest that far from going out of business in the near future, travel agents might actually become more widely used for future travel.

But it’s not quite as simple as that.

Challenges facing traditional travel agencies

Traditional travel agencies may have made a comeback in 2021, but they are still facing many problems and challenges in the fight to stay relevant.

Rise of online travel booking platforms

Online travel booking platforms like Expedia and Airbnb allow customers to easily book their own trips from the comfort of their homes. In2021, the online travel industry generated revenue worth more than $800 billion, with two-thirds of revenue in the global travel and tourism industry coming from online sales. This represents huge competition for traditional travel agencies that operate largely offline.

Building online credibility and presence

With such intense competition from online travel booking platforms, it’s becoming increasingly important for travel agents to build a strong online presence. Having a user-friendly website, strong search engine rankings, an active social media presence, and even a mobile app has never been more important.

High fixed costs

Most traditional travel agencies also have higher fixed costs compared to online alternatives due to high street rents. This may push many to evolve and become entirely online travel agencies in the near future.

If travel agents are to survive in the long term, they will have to evolve in more ways than one.

In many cases, this evolution is already happening.

The evolution of the travel agent

The internet, the pandemic, and many other factors have completely changed the environment travel agents operate in. And they are already adapting in multiple ways:

Crisis managers

Because of the uncertainty that COVID has brought about, travel agents have become more than just travel planners and providers. Many consumers now expect travel agents to be prepared with a plan if something goes wrong during a trip.

It’s been suggested that travel agents are now increasingly playing the role of a counselor, or crisis manager. Some companies have even started offering 24-hour text messaging support to help serve this demand.

In the world of business travel — as a platform where companies can book and manage all aspects of their travel — TravelPerk has been working to address this growing need for counseling and crisis management. We offer tools such as automated travel alerts, have partnered up with duty of care companies, and have a 24/7 customer care support service with real humans, no bots, and a 15 second response time.

We do all of this to ensure that our customers are always safe, comfortable, and in the know. 

Global issue experts

Some agencies have also started discussing global issues during weekly staff meetings. They then prepare sample e-mails on these issues to send to nervous customers.

Focusing on fewer customers

Many agencies downsized during the pandemic, and some have decided to remain that way. By taking on fewer clients, they can focus on more customized activities and perks for each client. This helps them build better long-term relationships with each client.

Independent contractors

Staff furloughs and remote working has allowed for an increase in independent travel agents. Many travel professionals have adapted to this new environment by working for independent contractor companies or choosing to join host agencies.

So it seems in one form or another, travel agents will survive! It’s likely they will continue to evolve and serve an ever-changing world of travel.

This is something we at TravelPerk are always striving to do in the world of business travel.

The modern way of booking business travel

In the world of leisure travel, travel agents have had to evolve to survive. For business travel, we feel that evolution is also necessary.

That’s why we’ve created a modern consumer-grade platform that manages all aspects of business travel. Our platform offers much more than a traditional business travel agency, with everything you need from booking and reporting to expensing. Some features include:

  • Instant platform set up.
  • $0 set up fee and no hidden costs.
  • 15-second response time for customer support.
  • 80% of costs back on canceled trips.
  • Easily claim 20% of your travel VAT.
  • Free trial on any pricing plan.

We also have unrivaled choice with the world’s largest travel inventory, and we’ve made corporate travel more flexible than ever before with FlexiPerk. This allows you to book any flight, hotel, car, or train at any rate, and cancel at any time, no questions asked. All business trips can be refunded by at least 80% with just a click.

If you’d like to learn more about how TravelPerk is evolving the world of business travel, feel free to request a demo for more information.

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