Travel technology has not always been kind to certain industry cohorts: travel agents being one of the endlessly highlighted losers of the accelerated pace towards the online sales.
The narrative goes like this: travel agents were usurped by the ease-of-booking provided direct-to-consumer by this new class of online travel agent, which streamlined a complex process. The proliferation of content online also took away the insider knowledge that made travel agents so invaluable, as consumers could search online for their own tips, places of interest and things to do.
The vast array of online tools not only made direct marketing easier, but also more appealing, to travel companies interested in owning their customer relationships rather than go through an intermediary such as a travel agent.
One area were travel agents were traditionally strong in spite of the emergence of online travel, was in cruise bookings. The ins-and-outs of the various cabins and the mind-boggling array of choices across ships made travel agents vital resources in the quest for the perfect cruise.
Yet, a recent report suggests that travel agents are losing the battle on the cruise front.
The report is PhoCusWright's 2012 US Online Travel Overview, and it points beyond online to direct channels for this shift.
Traditional travel agents are stagnating as a channel for cruise distribution. They made no significant gains in 2011 and lost out to online and direct channels.
The report calculated that traditional travel agents agencies accounted for 62% of cruise passenger revenue in 2011, down almost 4% since 2010. PhoCusWright predicted a further 5% drop by 2014, meaning that agents' share of cruise sales will decline to 57% overall by 2014.
This is still a sizable chunk of an ever-expanding cruise market, which will mitigate any drop in overall share. The report predicts that the cruise market should expand from $14 billion in 2011 to $17 billion by 2014.
The online component of the cruise market also grew by 32% to $1.9 billion in 2011. And by 2014, online cruise sales will account for 18% of all cruise revenue in 2014.
This shift is either being leveraged by cruise companies, or is being in part accelerated by them. Those cruise lines that were the most aggressive direct-to-consumer marketers have seen the largest growth in that share of their business.
In fact, when you look at the growth on social media for the large cruise lines, there is ample evidence that a direct marketing strategy is paying off.
By focusing on marketing directly to their current and potential customers, these brands have been able to vastly increase the revenue booked directly on their branded distribution channels. Company-owned sites will book an increase of 16% in revenue by 2014, growing their share of online bookings from 43% in 2010 to 59% in 2014.
This is a rapid increase that shows no sign in abating as the larger cruise lines double down on their direct marketing efforts, and begin seeing technology as a competitive advantage.
Carnival has created a series of videos targeting different demographics while laying claim to the first cruise line with 1 million fans, and Royal Caribbean has been especially active with technology, using social media to document the arrival of the Oasis of the Seas and creating on-board apps for families.
Other smaller cruise lines rely entirely on travel agents for their more boutique-based business, which explains why travel agents will have a consistent revenue stream despite the overall drop in market share.
While the revenue numbers might make it look good for travel agents, taking a smaller piece of a bigger pie is still a sign of inherent weakness that must be addressed.
Travel agents that are focused both on face-to-face in-person service and competing aggressively in the online space, are most poised to take advantage of this turning tide. Personal service, coupled with a typhoon of online information, has led some travelers to seek shelter beneath the travel agent's protective umbrella.
This report also demonstrates a wider raft of challenges for travel agents and companies looking to balance direct marketing with distribution channels such as OTAs. It's imperative to understand why each particular cohort uses each channel, and to develop strategies that most efficiently drives the right customer to the appropriate channel.
This trend of direct-to-consumer model is a not only challenging traditonal travel agencies, but also poses a threat to the now-traditional OTAs that rely on inventory for their business.
With companies now seeking to offer that inventory directly to the consumer without a middle man, every travel brand has to reconsider just how distribution decisions affect their business - and what technologies to use to most effectively manage the chosen distribution channels.
NB: Cruise line image from Shutterstock