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The US travel agency distribution landscape

May 21, 2008 | Hospitality Industry

According to a new PhoCusWright report, traditional travel agencies will continue to play an important role in travel distribution, despite the erosion of supplier commissions, the decline in travel agency locations, and the surge in online travel and direct bookings. This article summaries the key points of the report.

PhoCusWright says that while the Internet has been a significant area of growth and central driver of change in travel distribution over the past decade, the traditional travel agency segment remains significant, compelling, and deserving of careful study and consideration. According to the report, U.S. travel agents sold $110 billion in 2006, representing 41 percent of the total $266 billion travel market. The report says agents sold $107 billion, or 38 percent of the market in 2007, and projects that agency sales will be 33 percent of the total market by 2009. Yes, that’s a drop, but the report notes specifically that the rate of share loss has slowed.

PhoCusWright says the number of travel agency locations and travel agents is large, fragmented and highly varied – as if we all didn’t know that already! It says there are approximately 24,000 travel agency locations in the U.S. and a total travel agent population of 111,000, which according to our own research at Performance Media Group may be a little high.

According to PhoCusWright, the typical leisure agency today is focusing on more complex travel, such as cruises, vacation packages and independent itineraries, where commissions are still relatively high and more experience and expertise is needed to facilitate the consumer’s purchasing decision. But it also says that changes in the travel market have created opportunities for new travel agency models, such as home-based agents, cruise-only agents and agents focused on adventure, family, or honeymoons and weddings.

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