Recalibrating agencies — Businesses that survive Covid-19 will look different

THE ROAD TO RECOVERY

No one knows how long it will take for bookings to improve meaningfully, but in the meantime, it’s clear that some closures and consolidations are in the works.

P. Jason King Associates has created Travelmatchmakers.com, a business dedicated to connecting agencies, suppliers and investors. P. Jason King executive vice president Steve Gorga said consolidation will see an uptick in the fall and into 2021 and that a number of agency owners will opt to trade independent agency ownership for affiliation with a host agency.

Haisley Smith, vice president of marketing and development at Brownell Travel in Birmingham, Ala., observed that whenever there is an economic or global disruption, consolidation follows. She said she expects to see some agency closures, mergers and acquisitions as occurred in the period starting in the 1990s that saw the emergence of OTAs, airline commission caps and cuts and, finally, 9/11.

A similar impact was caused by the 2008 economic downturn.

“It’s tragic and it’s heartbreaking, but it’s inevitable that we’ll lose many of our colleagues,” she said.

Those hoping to remain in business are likely to first reevaluate their relationship with their host agency or consortium, examining what they’re paying and what they’re getting for it, said Mary Pat Sullivan, an industry consultant and leisure travel analyst at Phocuswright. (Phocuswright is owned by Travel Weekly parent company Northstar Travel Group.)

“I think they’re going to take a hard look at what they need and what they don’t need with respect to affiliation, with respect to commissions,” she said.

The upshot of the resulting churn is that there may also be a shrinking of host agencies and consortia, she said.

A recent Phocuswright report Sullivan authored found that in 2018, only 6% of agent respondents to a survey reported they were unaffiliated with a host, franchise or consortia, down from 14% in 2007. But that number could increase again as a result of the pandemic.

The coronavirus crisis will also undoubtedly cull the population of so-called hobbyists, i.e., agents who joined the trade primarily to get discounts on their own travel or who book only their friends and relatives. Sullivan said she believes their departure will elevate the level of professionalism among travel advisors.

For some agencies, the pandemic has opened the door to new initiatives or allowed them to work on long-deferred projects, some with only tenuous connection to traditional travel products. New York-based Embark Beyond has pivoted to offering private, backyard summer camps. Founder Jack Ezon said parents band together to purchase the experience, which runs $3,500 per week for 10 children and two counselors. To get the program going, Embark partnered with camp directors around the country, and it has held camps in locations ranging from Los Angeles to the Jersey Shore. 

Ezon said Embark has also begun to offer a “mini-moon” program, urging clients whose honeymoon plans may have been affected by the pandemic to book a small trip now in exchange for a free night on a more exotic honeymoon later.

The agency, also known for organizing large celebrations, began to offer “micro- celebrations” of 15 to 20 people at clients’ homes or at small resorts.

Keith Waldon, founder and director of Departure Lounge in Austin, Texas, has spent recent months laying the groundwork to expand his host agency into the EU and the U.K. The initiative had been planned prior to the coronavirus crisis, but he said the project moved more quickly because of the break in routine from typical, day-to-day operations, and he’s on track to branch out across the Atlantic later this year.

Other agency owners, he said, are also benefiting, personally and professionally.

A forced shutdown, he said, “gives us time to sit and ponder and think without doing it on the treadmill or in the rat race. I definitely have seen the value of having some time to actually put together a vegetable garden for the first time in about seven years and have that ‘thinking time’ when I’m digging in the dirt.”