Travel agents have to cope with e-commerce changes

January normally sees long queues outside travel agencies as people book their sun holiday

January normally sees long queues outside travel agencies as people book their sun holiday. But with websites now catering for package holidays, Colm Ward wonders if those days are gone

As the memory of Christmas dwindles and bank balances creep slowly back into credit, this is the time of year when thoughts turn towards holidays.

For many, January means deckchairs, sleeping bags and flasks of hot tea as they shiver through icy nights outside travel agencies waiting to get their hands on that precious prize - a bargain holiday in the sun.

For travel agents, the first six weeks of the year are the busiest as people rush to secure that longed-after week or fortnight far away from the freezing grip of an Irish winter. And, by all accounts, business seems to be booming.

Last year, for the first time, more than one million Irish people booked summer holidays in the sun, an increase of 12 per cent on 2001.

It was an "excellent year", said Mr Brendan Moran, chief executive of the Irish Travel Agents Association (ITAA), who expects to see a further 5 per cent rise this year.

But, like many industries, travel agents have had to adapt to cope with the changes brought about by e-commerce and more widely available internet access.

One of the biggest challenges the industry has faced has come from the airlines, many of whom have websites where customers can book their flights directly. This means that people can bypass travel agents and organise their own holidays.

To make matters worse for travel agents, the commission that airlines used to pay them for selling tickets on their flights has been reduced or, in some cases, abolished.

But the technology that brought about these challenges has also brought opportunities for travel agents. One of the most notable is the introduction of online booking facilities for package holidays. These are similar to the airlines' booking websites but with one crucial difference. Rather than just booking a flight from A to B, they allow customers to book an entire package over the internet.

The customer can simply go to the website and enter their holiday destination and the length of time they would like to spend there. Then, depending on availability, they will be offered a list of flights, accommodation and any extras according to their requirements, which they can book and pay for by credit card.

Michael Stein Travel introduced its online booking service at the end of 2000. Since then, the popularity of booking online has increased steadily. The number of bookings since November is double that for the same three months last year and the website now accounts for about 10 per cent of the company's business.

Many people are still wary of booking online, however, and use the website as an online brochure rather than as a means of booking their holiday. Once they have found all the information they need, they then call an agent or drop into one of the shops to finalise the details and book their holiday.

"The reason our direct sell is doing so well is that people are afraid to book online," says Mr Michael Stein.

He believes travel agents will have to embrace e-commerce if they are to survive in the present business climate where profit margins are falling and costs are increasing.

Interestingly, the types of people using online booking are not what might be expected. While it is unsurprising that young people account for a large portion of online bookings, Mr Stein says retired people are also big users of the service, whereas middle-aged people tend to use it less.

Similarly, the websites are far from being the domain of the last-minute booker, according to Ms Tanya Airey, managing director of Sunway.

Many people see online booking as a more convenient alternative to going into a travel agent's office. The advantage of having both options is that they can speak directly to a travel agent if they get into difficulty with a booking or with the holiday itself.

"If they make a mistake on the booking, they know that they can pick up the phone and talk to one of our agents," she says.

Sunway introduced its online booking service in April 2002 and Ms Airey believes it is only a matter of time before all travel agents will offer such a service. It is particularly valuable at this time of the year as it means that customers can book their holidays or get information without having to wait in a shop or on a phoneline.

Without the online facility, delays like these can often result in the travel agent losing a potential sale, she says.

So, does this signal the end for the January queue outside the travel agents? No, says Ms Niamh Hayes, marketing manager with Budget Travel. She sees the online service as something that complements the service currently being offered by agents. Indeed, Budget suspended its online booking service during this year's holiday sales.

About 2.5 per cent of Budget Travel's total sales are now done online and although she is "satisfied" with this, Ms Hayes expects the figure to increase in the coming years. Currently, online bookings make up about 4 per cent of travel agents' sales in the UK.

It is not just the customers who are able to take advantage of e-commerce in choosing their holidays. Many travel agents also use search engines and travel websites in finding the best deals for their clients. "Agents are using the online services a great deal in order to satisfy the needs of their customers," says Mr Moran of the ITAA.He predicts that, with falling commissions on ticket sales, more and more travel agents will base their business on finding the best prices using online browsers and then charge a small fee to the customer for this service.

However, those who choose to book their package holidays online are still in the minority and he believes that many travel agents still use their websites primarily to let customers know what products are available. "Many of the products are online for show purposes. They are not necessarily online for booking purposes. You would have to go into the agent to book."

So, while e-commerce might be making inroads into the travel business, it may be slightly premature to get rid of those sleeping bags and flasks just yet.

Related websites: www.steintravel.ie www.budgettravel.ie www.sunway.ie www.itaa.ie