Online channels lucrative for traditional travel agencies – but many challenges remain

Tourism service providers – mostly airlines – were the pioneers of online commerce and travel agencies later proved that if the Internet was an excellent opportunity for direct sales, then it was probably even better for resellers since they offered travellers an easy way to compare, rank and book the offers of different providers, thus providing the traveller with tremendous added value.

In 2012, 32% of all GDS air bookings in Spain made through travel agencies took place on the Internet. Pure virtual travel agencies still make up the bulk of these online bookings (23%), but the fastest growing segment in online bookings is that of the websites of traditional (high street) agencies. In 2012 their websites already accounted for 9% of total GDS air sales in Spain and this percentage keeps growing.

Of course traditional travel agencies still face big challenges in their shift online.

First of all developing the right multi-channel strategy is not an easy task. Travel agencies need to be where their customers are, which means they not only need to be present on the street and on the Internet, but also through the fast growing mobile and social channels.

Another challenge traditional travel agencies are facing in their move online is to find the right mix in their online product and services offers. In order to make their online channel more profitable and alluring, they will need to include additional products such as hotels, (dynamic) holiday packages and flight relatedancillary services like access to airport VIP lounges and fast tracks or priority boarding.

After almost two decades of the Internet it is clear that online channels offer many opportunities to all players in the travel industry and not only to the new online players. Traditional travel agencies that manage to implement the right multi-channel and product strategy will increasingly find an ally in online distribution instead of a menace.