To call the past two years a roller coaster ride would be an understatement, and while 2022 looks to be a better overall year for the trade — especially its latter half, when many are reporting strong advance bookings — there will still be ups and downs.
But the industry and country at large have something they didn’t at this time one year ago: Ready access to Covid-19 vaccines.
“It all changed the day that the vaccine rollout was announced, and that was just about this time last year,” David Kolner, Virtuoso’s senior vice president of strategy, said this month. “That was the beginning of the beginning.”
Travel agencies turn to 2022 with some key problems still in play. Cash flow remains an issue, because while bookings in many cases are strong, larger commission checks won’t be received until the client travels. Agency owners and managers are also faced with the problem of effectively staffing up to meet traveler demand. Many have reported it’s difficult to find the right people for open positions, and at the same time, it’s difficult to find money in the budget for salaries.
But while the industry is still recovering from the onslaught of Covid, and that recovery has been very uneven, things are still getting better, Kolner said.
“It’s been a speedup, and a slowdown, a speedup and a slowdown in many different ways in all different parts of the world, but it’s better, for sure,” he said.
J.D. O’Hara, CEO of Internova Travel Group, said 2022 will largely be dictated by Covid-19, its variants (both transmittal rate and severity) and how governments react.
If lockdowns and travel restrictions continue to be reinstated, travel’s rebound will reverse, but if an open system is maintained, he believes travel will continue to grow.
The cash flow crunch
O’Hara also said agencies’ cash flow “is not what it was in 2019, but we are getting very, very close to that not being an issue anymore.”
Advisors and agencies have been attempting to relieve cash flow issues in a number of ways. Service fees have grown in popularity. Selling travel insurance provides a commission upon the sale. Some suppliers are also paying commissions earlier in the sales process. But leaders in the agency community continue to hope more will follow suit, or even pay advisors outright for their booking work whether the client travels or not.
Jeff Anderson, co-CEO of Avoya Travel, continues to be a vocal advocate of a system where a nonrefundable portion of the commission is paid when a booking is made. (One of the traditional sticking points with early-pay commission initiatives has been the ability of the supplier to recall the commission if the travel doesn’t, in fact, happen.) While Avoya has engaged in private deals with suppliers, Anderson hopes it will become an industry norm.
“People don’t just need their money early,” Anderson said. “They need to know that it’s not going to be taken away from them down the road. That’s what’s going to make the distribution channel survive.”
It’s a reward to agents for their work, but suppliers that jump on board will likely be rewarded, too, he said. Advisors would be more likely to sell their product, and their market-share gain would be tangible. He hopes more suppliers will adopt the policy in 2022.
Individual travel advisors have an opportunity to increase revenue through charging fees and selling things like insurance, said Alex Sharpe, CEO of Signature Travel Group. Agency owners, however, might not be back to 100% because they have fewer advisors.
2022 challenges
Hiring is a challenge right now, Sharpe said. And while in some categories, like cruise sales, Signature’s network is outperforming 2019 numbers, he said he believes 2023 is the year agencies will really reach their potential.
Right now, “pent-up demand is real,” said David Harris, CEO of Ensemble Travel Group.
But the road to recovery is still long, he said. Until testing and travel restrictions are better defined, travel will not be able to fully resume. It’s a deterrent for travelers who don’t want to deal with the uncertainty of producing a negative test to return to the U.S.
On top of that, Harris pointed to another potential snag in recovery: It remains unclear how inflation concerns will impact the economy and consumer habits.
Capacity concerns in 2022 are also on executives’ minds. Kolner pointed to this past summer, when travelers flocked to domestic destinations. In the luxury space, supply was hard to come by.
There is a fear that scenario could play out again.
“On one hand, we are hopeful for the recovery,” Kolner said. “But we’re also worried, is there going to be enough capacity to even satisfy the demand?”
But one thing is certain about the year ahead: Consumers are confident in their travel advisors and are using them more than before.
“We’re seeing a surge in the human travel advisor,” O’Hara said. “We’re seeing a lot more consultation going on with travel advisors, which is a great thing for us. People are taking longer to make a booking, so the revenue doesn’t change but the time to make a booking does; but we don’t mind that because we like the relationship that we can forge, and establish that trust with the traveler.”
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