Another day, another report that says travel agents are booking less frequently with global distribution systems (GDSs).
The latest study pedaling a rueful nostalgia is from 2014 Supplier-Travel Agent Marketing Report from ASTA, the American Society of Travel Agents.
The report says agents are booking air tickets 15% less than they did in 2006, while they're booking tickets direct from airline websites 65% more. That result combines with the trend that there are fewer than 10,000 agencies in the US today -- down from 32,000 in 1998.
Given those factors, you might think travel agents are doing significantly fewer bookings with GDSs. But is that true?
Are agents shifting volume to direct supplier websites, such as an airline's own website, and online agency websites like Expedia, and third-party aggregators, such as FareLogix, TravelFusion and AgentWare, as alternatives?
The reports do not map neatly with numbers released by the GDSs, which have been the marketplaces for shopping for airplane tickets for the past 50 years.
GDS data suggests there may have been only modest declines.
None of this makes the ASTA study suspect. Far from it. The survey was of a representative sample of members of the association.
But a warning may be in order about reading too much into the results.
GDS numbers
A spokesperson for Sabre says the company is unable to comment due to the quiet period in the run up to its IPO effort. But public filings reveal some details.
Sabre claims to have the largest share of GDS-processed air bookings in North America -- relevant to the ASTA study of American agents -- and a 37% share of global air bookings.
In its S-1 filing last month, Sabre shared a few relevant facts:
"We believe that the rate at which bookings are shifting from indirect [i.e., GDS-based bookings] to direct [i.e., supplier/airline] distribution channels has slowed for a number of reasons, and that the rate of shift in the United States stabilized at very low levels in 2012 and 2013."
Regrettably, the S-1 doesn't specifically say if there's a drop-off in usage by small and regional agencies specifically. It only says it still serves "thousands" of regional travel agency customers that serve business, leisure, and niche travelers.
Still, it's an open question if a survey of a 10,000-agency-member organization can be extrapolated globally.
Sabre, for instance, claims to serve about 400,000 online and offline travel agents worldwide.... about half of which use its main agency point of sale software. That's a much broader pool of agents to consider.
There are other factors at play, of course. Segments might also have been hit by the number of low cost carriers coming to market not in the GDS.
Hotel segment shift?
ASTA's survey found that American agents use GDSs to book lodging 29% less today than they did in 2006, while agent reservations made on hotel websites have increased 58%.
That's one perspective, over a long period.
But if you look at the latest data from another source, a different picture emerges.
TravelClick, a provider of cloud-based solutions for hotels, found that GDS room nights in Q4 2013 grew by 5.3%, year-over-year, in North America.
That was a larger jump than it reported for either OTAs or brand.com sites received from travel agents.
When you expand your focus worldwide, the picture adjusts yet again.
A different 2013 TravelClick study at the global level showed that agents’ use of GDSs for hotel booking is growing faster than their use of any other distribution channel for hotel bookings.
So the long-term weakness may be confined to the US, which, coincidentally, hasn't been an area of growth for Sabre since its last public data reports in 2006.
Here's a different take:
Amadeus, the Spain-headquartered GDS, says it saw an overall increase in agent booked air segments in 2013.
Its agency air passenger bookings rose in the 12 months to September 2013 from 320 million to 341 million. (The latest figures will be announced on February 28. It claims a 40% market share of global agency bookings through GDSs.)
Its multi-year trend has been about slight growth or holding steady, not decline.
Meanwhile, Travelport, the Atlanta, US-based GDS, which is also in a quiet period ahead of its next earnings report, has seen its agent bookings hold steady since 2010.
Take a look at its financial declarations, which break out how many segments of passenger travel agents worldwide booked through it. A majority of these segments were air bookings.
If one looks at the period between January and September every year for the past several years since 2009, the number of segments booked has hovered steadily at 270 million, plus or minus a few million. (Segments are above the levels of 2007-2008, but the global economic crisis had arguably suppressed levels at that time.)
While GDS bookings don't look like a blockbuster growth business for Travelport, its numbers don't suggest a significant annualized average decline, either.
Furthermore, the company's efforts to target emerging markets such as East Africa and its "new GDS" via the AXESS system in Japan are perhaps where it will see either growth in segments or arrest any ongoing declines over time.
Tangled web
GDSs have long given travel agents a cut of the fees, while also often supplying back-office systems. GDSs have wanted to reduce these kickbacks in recent years, as airlines have negotiated hard on segment fees. But they haven't been able to, as the bargaining hand of agents has been strong.
The ASTA survey is a warning to GDSs that the agents may not stay beholden to them.
There is a strong, underlying dissatisfaction among agents with GDS tools. The ASTA report found especially pronounced weakness in GDS bookings of cruise and leisure travel.
Why?
One gripe is ease of use.
A refrain among some of the younger agents have become used to the savvy interfaces of consumer websites and they find GDS desktop software clumsy and non-intuitive in contrast.
GDSs have responded by trying to make their tools more user friendly with "graphical user-interfaces", but uptake has been slow. Despite complaints, some established agencies seem reluctant to learn new systems.
Another of the most common agent gripes is about the struggle of their workflow management solutions to cope with the upsurge in ancillaries. GDSs take ages to launch bundled fares and other products -- like Air New Zealand's SkyCouch -- into new markets.
Or at least that's a claim made by suppliers like AirFrance/KLM -- though not by ASTA. Yet merchandising dissatisfaction cuts many ways. GDSs say they have been responding with their own platforms.
Yet maybe GDSs don't care too much about losing share of air bookings from small to medium-sized agencies.
Even when agents shift share away from GDSs, GDSs may still book revenue. They power or provide distribution for almost all of the online alternatives, too.
GDSs can rely on the largest companies to move volumes. About a third of Sabre's GDS booking revenue came from Sabre's five largest travel buyers, who are OTAs and TMCs -- not smaller agencies.
For what it's worth, agencies don't appear to be quitting their GDS contracts yet, even though they're typically allowed to terminate their non-exclusive contracts at any time without cause.
For example, during the fiscal year 2012 (the most recent available), Sabre claimed an agency customer retention rate for its air bookings GDSs of approximately 99%.
One reason for sticking with GDS contracts may be that the alternatives aren't great for building tickets for complex itineraries.
The vast computing and deal-negotiating complexity of ticketing -- especially for multi-leg, international itineraries -- appears to give a structural advantage to giant GDSs. They are best placed financially to afford to invest large sums in information technology.
Eventually, though, increased consolidation among travel agencies and TMCs may ultimately reduce the pool of agencies that subscribe to GDSs.
So it's no wonder that, at least on the global level -- if not at the US level that ASTA mostly focuses on -- GDS volumes are about neutral, or holding steady.
And this is before the relaxation of the Travelsky-China situation (where there is finally some significant dismantling of the walled garden in the country, opening up distribution to the outside world) perhaps has an impact.
Maybe GDSs not in nursing homes after all.
NB:Wire cut image via Shutterstock.
NB: Post was updated on 18 February to include more up-to-date GDS statistics.