Travel agencies’ digital dilemma

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A man bikes along a travel agency in UN Avenue Manila, January 7, 2015.

IN an age when practically anyone with a smartphone, a stable Internet connection and a credit card can book a flight and hotel room on his own and personalize his itinerary, it seems that travel agencies are pointless. Stories revolving around their decline abound. And it’s not unusual to encounter headlines containing the words “death” and “dying.” But are they really on the verge of permanent obsolescence?

In western countries like the U.S., where technological advancements are embraced much more rapidly than in less developed nations, travel agencies are actually thriving. According to the online research company Statista, the American travel agency industry is predicted to generate $17.3 billion in revenue in 2020, up from $15.5 billion in 2015. And its profit-to-revenue ratio is estimated to have increased twofold from 6% roughly a decade ago to 12% by 2015.

It’s no different here. In the 2009 Survey of Tourism Establishments in the Philippines (STEP) for Transport Operators, Tour and Travel Agencies of the Philippine Statistics Authority (PSA), there were only 864 establishments engaged in activities of tour and travel agencies. In PSA’s 2014 STEP, that figure shot up to 1,532. Their revenue also rose. The 2009 STEP showed that transport operators, tour and travel agencies made P164.5 billion. In the latest STEP, their revenue reached P229.6 billion.

The Philippine Travel Agencies Association (PTAA), a group established in 1979 to foster unity in the travel industry and promote the welfare of its members and the traveling public, has been seeing its membership increase every year, its president, Marlene Dado Jante, told BusinessWorld in an interview. There are currently 623 travel agencies that belong to PTAA. In January of this year alone, the association inducted 18 new members.

The increase is even more astonishing considering that PTAA has strict requirements such as physical office in a commercial area. In addition, Ms. Jante said, “You need to show that you are actually paying government taxes.”

Online travel agencies

It’s no doubt an encouraging development, but travel agencies, particularly the brick-and-mortar ones, are still facing threat, not from their perceived uselessness by the public but from their digital brethren, online travel agencies (OTAs) like Expedia. “We admit that OTAs are really our competitors,” Ms. Jante said. “That’s why we have to do better.”

In a 2014 survey of 3,500 American leisure travelers (and 1,500 business travelers) conducted by Google, one in three chose to transact with OTAs for their superior site tools and options. The other reasons that they had for booking on OTAs: lower prices/better deals, past positive experience or recommendations for the site, existence of loyalty/rewards programs, and prominence in Google search results.

According to Ms. Jante, traditional travel agents have their own advantage: their superior knowledge of tourist destinations. “If you come to me and say you want to go hiking or mountain climbing, we know the place” to recommend, she said. Travel agents, like all the members of PTAA, are constantly sharpening their touristic knowledge. “Travel agents continue to have and attend trainings and familiarization tours,” she said. “We go to a lot of places.”

Traditional travel agents have also started to focus more on corporate accounts. “We do group tours,” Ms. Jante said. “And I believe that OTAs cannot do that.” She went on to say that those tours include pre-departure briefing that includes information about which specific places are best to visit and warnings about which places are best to avoid.

At the end of the day, Ms. Jante emphasized, “Computers do not talk. We talk.” And having someone to talk to in case of an emergency while having a trip abroad can be life-saving. Ms. Jante, who runs her own travel agency, Queenspoint Travel & Tours Corp., always keeps her phone within reach in case someone needs her help. “I see to it that I’m ready to take calls anytime,” she said, even in the dead of the night.