Home is where the start is

EARLIER this year Flight Centre announced the closure of more than 420 of its stores across Australia, while Helloworld has also revealed that 5% of its outlets are closing. Scores of independent travel agents have also closed their offices or are hoping to renegotiate leases so they can survive the COVID-19 downturn. Some have said the pandemic has accelerated the evolution of the Australian travel industry by about five years, putting us further down the track towards the situation in the USA where bricks and mortar agencies are few and far between. Home-based or mobile travel agencies have been in the local market for some time, and with thousands of experienced travel consultants out of work, it’s expected that some will pivot to this new way of working. Adam Bishop investigates the home-based future of the industry.

One of the questions we keep hearing during the current health crisis is ‘when will things return to normal?’ But perhaps this is a query destined to never elicit a suitable response. What if this global pandemic is a one-way ticket? What if there is no return to normality, just a rapid forward trajectory into a brave new world? For the Australian travel industry there is certainly compelling evidence to suggest the landscape has, and will continue to be, permanently altered by COVID-19.

Businesses are being forced to adapt and transform their models expeditiously to cater for each successive ruction caused by restrictions, and it’s fair to say that travel agents have been on the front line of this chaotic environment, bearing the biggest economic brunt.

Major player Flight Centre has already been forced to undertake significant cuts to its bricks and mortar division in Australia as part of a survival plan, closing more than 400 stores and shedding approximately 70% of its staff through either redundancies or stand downs. Similarly, Helloworld has trimmed its physical shopfront operations by 5% and downsized its staff pool by 35%, and these are all preliminary signs that travel agencies in Australia may be forced to follow the US trend of exchanging traditional operations, which often carry expensive overheads, for leaner home-based models. In fact, when it comes to using America as a yardstick for how the local market will pivot and react to COVID-19, Flight Centre’s announcement in June this year that it will reopen just 30 of its 125 Liberty Travel stores in the USA after the COVID-19 pandemic subsides, should provide a fairly sobering insight into the future.

But as many home-based travel agent networks point out, the travel shutdown need not necessarily be a juncture point to espouse doom and gloom and cry into our collective beer glasses. Perhaps the silver lining to this awful crisis is that it has become an important driver to make the industry more efficient, malleable and resilient in the long-term, effectively fast-tracking the travel sector’s evolution to fall in line with broader international trends.

Kate Cameron, the General Manager of Flight Centre’s home-based network Travel Partners agrees with that assessment, telling travelBulletin that remote travel agency models are positioned much better than physical stores during the current crisis, with agents able to keep costs down to a minimum on virtually no spend – a critical factor in businesses being able to survive the shutdown.

“If people are able to run their business from home without the shopfront, you would need to question why you would go back to that additional cost and pressure of monthly payments for premises you don’t strictly need — unless you have no client loyalty and this would mean you may have issues to tackle,” Cameron argues.

“With the technology and systems we all have access to these days, you can create a team environment and still have connected motivated staff who are working from home.

“Without a shopfront, these agents also do not have to worry about their clients walking past a shop that is closed with the lights off, giving the impression of the business being gone completely – our agents can be anywhere and still available for their clients, at any anytime,” she added.

Taking the challenges posed by the pandemic on the front foot, Travel Partners recently launched a new initiative called Home of the Entrepreneur (#HOTTE), which aims to support independent agents struggling during the shutdown by providing them with a free path to join its network and access tools and incentives such as additional commission for domestic travel bookings.

“We believe we have a role to play in finding ways to continue to provide support for this travel sector to hibernate effectively and efficiently and rebuild their businesses when the green shoots of travel return,” Cameron contends.

CEO for MTA — Mobile Travel Agents, Don Beattie, is another major travel leader who agrees that the onset of COVID-19 could precipitate a shift towards remote models from bricks and mortar stores, suggesting skinny revenue streams and expensive overheads could be key to instigating a significant migration of agents.

“The lower cost structure does lend itself to seeing an increase in home-based travel advisors in the future,” Beattie believes.

“It has been quoted that up to 40% of traditional travel agencies will cease to exist post COVID-19, which is really sad because it hasn’t been of their making, the high cost of rents and staff costs are always more visible when income has been severely impacted.

“Bricks and mortar stores often rely on ‘walk-ins’ and given the severe restrictions in some areas this business stream has been severely curtailed…and recently we have even seen instances where previous critics of the home-based model are now endorsing it and promoting it as the way of the future,” he added.

Beattie also predicts that some existing bricks and mortar agencies will likely “dabble” in the home-based model, and perhaps even become hybrid models moving forward.

Outside of the obvious cost-based advantages, TravelManagers Chairman Barry Mayo posits that remote travel agents also boast a competitive skills-based edge over traditional agents during the prolonged period of limited physical interaction.

 

“Home-based agents are already used to working remotely and are experienced in using alternative methods of communication to complement face-to-face interaction with their clients,” Mayo suggests.

“These established practices have really enabled them to continue to work proactively in their businesses and incorporate flexibility around other commitments to reach clients at a convenient time for both parties.

“In the case of TravelManagers, a PTM may have previously visited clients in their homes, offices or met them for coffee, so the depth of the client relationships they frequently have is an advantage,” he added.

Your Travel & Cruise Managing Director Les Farrar concurs with Mayo, adding that existing remote agents may have the best survival instincts in the business, in so far as they are more adept at being reactive to the market where necessary and have the luxury of relying upon a larger reservoir of goodwill with clients.

“They have the ability to adapt their business model quickly, for example, changing their focus to domestic travel, whilst many retail agents have traditionally shunned domestic and are now hoping to reverse that trend, home-based agents have generally looked after all their clients travel needs including domestic, making it much easier to pivot towards that market,” Farrar believes.

Home-based agents are well placed to take advantage of a trend towards domestic travel. Image courtesy South Australia Tourist Commission

“Home-based agents generally have a very loyal client base, many of which are friends or long-standing contacts, and these people are more likely to have a deeper understanding of the challenges within our industry.

“They are motivated to help their friend and agent through directing and referring any business they can, and this will help our home-based agents to recover quickly from the current slowdown in sales,” he added.

Adding credence to the theory that strong client relationships and expertise will play key roles in allowing remote agents to navigate the crisis more effectively than retail stores is Savenio Managing Director David Brandon, who suggests client loyalty will prove to be the master variable to future success.

“The reality is clients will follow their travel agent, they want someone who understands how they like to travel, what they want and knows them personally,” he said.

“While many advisors worry they won’t get the client leads at home, the reality is that the best way to build business is by expert service and referrals.

“I really think home-based consultants will be the majority of our workforce in the future, they have the independence to do what they want to do and not be stuck in an environment where they have to sell particular products,” Brandon added.

But the full story of the travel shutdown has ultimately been about a lot more than just dollars and cents, with the psychological burden placed on the shoulders of agents causing many a tremendous amount of mental distress and anxiety.

For Travel Counsellors Australia Regional Managing Director Kaylene Shuttlewood, this emotional hurdle carries as much currency with her home-based network as sales volumes do, a principle that she says is baked into the DNA of remote agency networks.

Travel Counsellors was quick to recognise the potential psychological fallout that COVID-19 could cause its members, rolling out a series of support measures and additional resources to assist its agents in making it through for the long-haul.

“Our Travel Counsellors have handled the pandemic better than expected which can be attributed to the very strong, close-knit community we have, and the level of support that Travel Counsellors Australia have always offered to each and every one of our franchise owners,” she said.

“We have our own online Coronavirus Hub which is managed by the entire head office team and updated when new information is announced, and there is 24/7 support of the duty office if there is a travel emergency which was heavily relied on for customers and Travel Counsellors alike when border closures were first announced.

“To encourage community engagement and lift the spirits of our Travel Counsellors, our head office staff have hosted fun weekly activities like Tuesday Trivia and Masterchef Fridays over live video call; these two events were enjoyed by everyone and by popular demand has been requested to continue for the foreseeable future,” Shuttlewood added.

But Travel Counsellors is not the only home-based network placing an emphasis on mental welfare, with Travel Partners’ Kate Cameron noting the company had ramped up its support structures at the start of the pandemic as well, heading off any potential uptick in apprehension amongst its members.

“We have focused on increasing our communication and visibility within our network — they have access to the latest developments and all the policies at hand – we keep things simple and clear to provide optimum support,” she said.

“We have also stepped up our training and support for agents in areas where they can improve and future-proof their businesses which is critical to ensure growth and success during re-emergence.

“Our role has been to be there for the agents — to assist them in whatever need and request they have had and to ensure we support them mentally, physically and encourage every little success and booking — we are a family and we are here for each other.”

With so many retail agents out of work and looking for their next gig, the low financial barrier for entry to become a home-based agent could well be another strong tailwind transitioning the industry — especially with the major networks competing to capture their portion of the talent deluge who have been left displaced by the virus.

All of the major networks have either reduced or waived member fees entirely in a bid to retain and attract talent, with Travel Partners pushing the boat out the furthest, extinguishing all member fees right through until July 2021.

“Without the ability to earn revenue and in some instances, having to pay back commissions, we know our agents are hurting and we strongly believe we must play a role to support them,” Cameron said.

And while bricks and mortar stores in Australia face a future of continuing cuts and downsizing, the feedback from the home-based networks regarding retention has been overwhelmingly positive, despite the major challenges proposed by the travel downturn.

MTA’s Don Beattie said he was not aware of a single one of his members closing down because of COVID-19.

While admitting that JobKeeper had so far provided a vital lifeline in retaining members in the short-term, Beattie also noted the company’s members retained a very positive mindset, many of whom are still very active and on the hunt for new business opportunities.

Likewise, TravelManagers’ Barry Mayo said that only 7% of his company’s network had opted to pursue another career as the majority of PTMs move in to “semi-hibernation mode”, with many actively developing or sourcing domestic product opportunities and marketing this to their client base and digital followers to build their future sales pipelines.

Outside of the migration of agents to remote working, many of the leaders of these home-based networks agree that it’s very unlikely this trend alone will constitute future change in the travel sector as it recovers from the battle scars inflicted on it by the pandemic.

Predictions include a need for suppliers to exercise greater flexibility to survive, such as being more accommodating regarding deposit dates and amounts, refunds, credit policies and improved insurance protection.

Another encouraging sign for the travel trade is a view among leaders that the relationships cultivated during the trauma of COVID-19 has created a large bank of goodwill that could see a shift away from online booking engines down the track.

“I believe there will be a swing back to agents coming out of this pandemic — as clients will want the assistance and comfort an expert can offer them when making their travel plans and even though agents have been portrayed negatively around the refund process, I think the education we are focussed on now to really help the customer understand how travel operates and how all parts of the supply chain interact and make money is important,” Kate Cameron said.

Travel Counsellors’ Kaylene Shuttlewood adds that agents would be well served to embrace a sense of optimism during these challenging times, suggesting the sector’s greatest strength is its unity through adversity and the enduring appetite for Aussies to travel.

“The travel industry as a whole will certainly be a tighter knit community as we continue to lean on each other for support,” she assured.

“The more we are all involved with our industry bodies like AFTA, CLIA and CATO the better, as we need to have one powerful voice as we fight for further government support — personally, I haven’t been on a plane for six months and I’m pretty sure my partner is keen to get me travelling away again so he can have some peace and quiet and I am sure we’re not the only ones.”

 

 

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