travelBulletin

Industry hurting but struggle will pass: Hoffmann

Travel agents are feeling the squeeze as the struggling Australian dollar and online rivals bear down on the industry, but agency groups remain optimistic that the pressure will ease as the sector pushes through the current cycle.

tb1Travel agents are feeling the squeeze as the struggling Australian dollar and online rivals bear down on the industry, but agency groups remain optimistic that the pressure will ease as the sector pushes through the current cycle.

In an extensive interview with travelBulletin, Phil Hoffmann Travel founder Phil Hoffmann explained that business was “hard work” at the moment as travellers become increasingly reluctant to put their cash on the line. While the softening Australian dollar was causing some self-funded retirees to think twice about long haul travel, Hoffmann said the federal government’s move to change superannuation has been the main culprit.

“The government has attacked superannuation for baby boomers — which is our main market — and put people on the conservative side of spending. While lower interest rates has helped one part of the market, baby boomers are realising they will not earn as much as they did in the past and think they can’t afford holidays.

“It is creating nervous travellers and affecting people’s thinking.”

The sentiment is not, however, felt across the industry, with Travellers Choice CEO Christian Hunter claiming that its members have not necessarily reported the same trend. “There is no indication of a fall in commitment [from consumers] however booking patterns are still unpredictable,” he told travelBulletin.
However, Hoffmann remained confident that the business of travel would again pick up, branding the current state of play as “cyclical”.

“It is hard to push travellers over the line at the moment, but we’ve seen this before. We just need perceptions to change,” he said.

Hoffmann claimed that the recovery would be price driven and that the cost of travel would inevitably decline in response to subdued bookings. “A lot of things have added up to make the current market difficult for everyone, but prices will come down further and airlines will respond with cheaper fares. That’s the only way,” he said.

He also urged consultants to turn around the conversation on pricing and assure travellers that the cost of travel has dramatically decreased over the past 25 years. “Breaking down perceptions is difficult, but [consultants] should take the high ground and highlight that the price of goods is in fact 35% cheaper than two decades ago,” he said. “Earlybirds to Europe used to cost $3500 and they opened this year for $1530 – the landscape has changed and we need to change the conversation.”

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