Are OTAs making offline travel agencies go out of business?

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A few years back, the concept of sharing personal details online including bank details were looked down upon with suspicions. And, maybe that was the very reason why many travellers did not respond positively when the first online travel agency entered the World Wide Web in 1994. Fast forward 20 years and we see OTAs literally dominating users’ most preferred medium of booking vacations online. And, with the rise in online travel agencies, companies that provide travel agency software services are also on an expansion spree.

But, the question is did the OTAs manage to drive a final nail to the coffin for brick and mortar agencies?  Or, the fact that offline travel agencies are going out of business is just a myth?

Statistics present a hazy picture

If we look at the statistics, we will see that the individual travel agents or offline agencies are really not falling in disfavour completely with the young millennial. There is definitely a dip in their growth, but we cannot say with confidence that the brick and mortar agencies are breathing their last.

Not long ago, Roy Morgan Research reported that nearly 50% of Australians hired a travel agent to book their overseas vacation and not an OTA.  Yet, another survey showed that nearly 28% of otherwise app-savvy Millennials had used a travel agent for making travel bookings. And, the reason cited by such behaviour was expert destination opinion and good connection with local travel service providers, according to the same study.

Even though, the OTAs provide a convenient mode of planning travel itineraries and booking vacations using an online booking engine, right from purchasing flight tickets, making hotel reservations or hiring car rentals for transfer from the same platform, this preference of the Millennials is really confusing, to say the least.

But, the shift to the digital media may be slower than was predicted. Hence, the survey conducted by the travel site, Skift, which shows only 10% out of a group of 750 millennials had consulted a travel agent for their trip. This contrasting figure is attributed to the fact that the older millennials falling within the age group of 25 to 34 value their time and “they want to make the most of their experience and they’re not going to waste their time”, according to Paul Bennett, co-founder of Context Travel.

Such generation of vacationers are less inclined to invest some of their valuable time to trip planning and are ready to rely on another’s expertise, instead.

On the contrary, the younger generation of millennial travellers is “convinced they can find anything they want [themselves]” and that “they’re happier to deal with a robot or an algorithm than a human,” as per Jack Dancy, founder of Trufflepig Travel. Online booking engine for travel agents offer a convenient method of booking itineraries online and are preferred most by this younger generation of travellers.

Having said that, the year 2017 witnessed a sharp decline in travel agents’ businesses. “Approximately 700 high street travel agents closed their shutters in the UK last year”, says a recent report. Another news report shows a third of UK travel agents are likely to go out of business by 2021. 

The mixed-bag of data shows that the gradual shift towards OTAs is not as swift in some countries such as the UK, as is seen in a few others like the USA. Nevertheless, such preferences vary depending upon certain types of travellers.

For example – 

An article by Forbes says that Luxury travellers, armed with larger budgets, give more value to the relationship with an agent. 

A similar thought is expressed by the co-founder and former chief technology officer of the booking site, Kayak. He says, “I realized that when people are spending a lot of money on something, they take comfort in talking directly to a person before making their booking.”

Irrespective of what the future may hold for the individual travel agents, the present picture is pretty shady and do not completely support the fact that the brick and mortar travel agencies are not getting obsolete anytime soon!

Why OTAs are gaining traction in the market?

Melissa Teates, CAE, director of research at the American Society of Travel Agents, say “We estimate that less than 10% of sales are coming from independent agents, mostly home-based, measured in dollars.” Likewise, the overall number of full-time travel agents in the U.S. alone dropped from 124,000 in 2000 to 74,000 in 2014, according to the Bureau of Labor Statistics.

Currently, just one in five travellers are opting to hire individual travel agents for their holiday planning. There are obvious reasons why OTAs are gaining traction, a few of which can be mentioned here.

Transparency in prices

The online market has made prices transparent by doing away with hidden charges usually common with individual agents. The transition began as early as 2014 with nearly 39% of travel bookings accounted by OTAs, according to a recent report.

With lucrative travel offers and interesting holiday packages, the OTAs are slowly capturing the market from the agencies. The itinerary builder software for travel agencies provide a convenient method of planning and booking travel itineraries online, that is faster and efficient compared to what an individual agent or an offline travel agency is capable of providing.

Unlike offline agencies who charge extra for their services apart from the amount incurred for booking holidays with them, booking from OTAs will have prices mentioned aforehand with taxes included and no extra hidden charges taken from the customers.

More benefits than before

Right from better prices, transparency and convenience, to brand recognition and loyalty programs, OTAs have untold benefits that attract travellers in huge numbers. With the use of travel agency software services, the online travel agencies have emerged as a one-stop platform for comparing flight/hotel rates from different vendors, making hotel reservations, hiring car rentals for transfer and planning their entire itinerary online within seconds.

But, offline agencies failed to comply with ‘one-stop-solution’ need of new-age travellers. To support this point we have data from Google study that says one-third of leisure travellers and half of the business travellers select OTAs for their tools and different value-added options.

Spoilt for choices – efficient and cheaper

OTAs will literally spoil you with choices. On the contrary, you have to approach a different agent to get your complete holiday planned and booked, not to mention the amount you have incurred at the end of the booking, also the length of your precious time your agent consumed. In exchange for expert opinions about holiday destinations, you ended up raising your overall travel budget.

OTAs are truly efficient and cheaper compared to what offline agencies offer.

The final verdict

The findings and data present a mixed opinion. But it is safer to say, that OTAs, with their multitasking travel agency software services, are truly replacing the brick and mortar travel agencies, but it will be wrong to say the latter is about to go extinct once and for all.  Niche markets with preferred personalized services, for instance, luxury travellers, will keep their hearts beating, even if they are surviving on ventilation, rhetorically speaking. 

About the author

Goranga Tech is one of the leading travel software company who develops various Travel Online Software & Travel Applications for the travel industry.

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