Steve Jones’ Say: December 2017

Let me add to the chorus of voices who between now and January 1 will lament the rapid passing of the year. Can it really be 12 months since we were preparing for the 2017 festivities?

Clearly it is. And seeing as it’s the final column of 2017, what better time for one or two end-of-year observations.

So another year has rolled by and still travel agents are clinging on. The dinosaurs written off 20 years ago still roam among us. But their passing is surely a matter of time. Just as we said in 1997.

Yet I’m going to stick my neck and out say this: I have a suspicion they might also be around this time next year. Come hook or by crook — and there’s still one or two of those in our midst — they will survive.

To avoid any misunderstanding, I write that with tongue firmly planted in cheek. Travel agents, good ones at any rate, will have a role to play for years to come. And while it’s unpopular to suggest within ear shot of some of the more sensitive and reactionary bricks and mortar retailers, so will OTAs.

I think the sector sometimes forgets this is a customer-driven market. I read something recently which listed the ‘top reasons to book with a travel agent’. One of those effectively sneered at people who book travel online and all the “hassle” it entails. Well, millions clearly enjoy the hassle because Webjet, for one, posted record profits this year. Just as some people wade through countless brochures, others pore over countless web pages. Horses for courses. And both have their place.

Overall, it’s been a strong year for retail. Yet Flight Centre’s announcement that it will close under-performing stores may have dented sector confidence. Is it purely a Flight Centre issue or indicative of general market conditions? A bit of both most likely.

What is interesting to note is that Macquarie Bank told investors in March, after a poor first half by Flight Centre’s standards, that the retailer needed to bring the shutters down on 135 stores to return to previous growth levels. Flight Centre rejected the methodology and assertions at the time, saying it saw no need for such measures. But shut stores it will. Flight Centre put no number on its planned closures — and there is no suggestion it will be anywhere near 135 — but clearly some of its stores, for whatever reason, are failing to perform. The extent of its network reduction will be worth watching in 2018.

Skroo Turner has been among those retail leaders blaming low airfares for subdued revenue and profits. Certainly there are some eye-catching prices available. But a lack of earlybirds, certainly at the time of writing this column, may indicate that fares will get no lower. While that will please retailers, only a reduction in capacity will see any meaningful rise in fares, and it’s hard to see that happening.

Low fares, of course, stimulate travel. It just means agents have to work that much harder to achieve the same returns.

Here’s to a top 2018.

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