Pandemic Accelerates Digitalization of Travel Agencies: GlobalData

The pandemic has accelerated the digitization of the travel agent model, creating more shop closures as in-store agencies switch operations online. This is a necessary adaptation to changing consumer preferences, says GlobalData, a leading data and analytics company.

“The long-term survival of in-store travel agencies has been discussed for several years due to the rising popularity of online bookings. Success in 2021 will largely depend on good levels of cash-flow, an area in which online travel agents (OTAs) continue to be a step ahead of traditional brick and mortar style agencies, thanks to their asset light business models,” says Johanna Bonhill-Smith, Travel & Tourism Analyst at GlobalData.

GlobalData’s Q3 2019 consumer survey reveals that even during pre-pandemic, booking in-store was decreasing in popularity. Only 17% of global respondents in the survey declared they booked with an in-store travel agent. A more recent GlobalData survey in December 2020 found that 47% of global respondents would buy more products online rather than visiting a store and 60% would do banking transactions online in the ‘new normal’.

According to Bonhill-Smith, store closures were essential for travel agencies to stay afloat in the pandemic, following a decrease in revenue and high demand for refunds. “It now boils down to survival of the fittest. The rollout of vaccinations worldwide, coupled with the supposed release of digital vaccine passports, has offered a beacon of hope for the travel sector. However, the news of new variants of COVID-19, coupled with ongoing lockdowns across Europe, suggests 2021 will still be a year that is far from normal.

“Traditional in-store travel agencies have been increasingly under pressure to develop their online directories to remain competitive within the global marketplace. The lower the fixed costs for travel agencies, the greater flexibility they will have in servicing the future travel space. Therefore, more shop closures are likely to follow as we enter the so-called ‘new normal’.”

The world-renowned tour operator TUI is the most recent to announce its plans to close a further 48 branches in 2021. This, in addition to the 166 TUI shops that were shut in 2020, leaves the company with around 314 branches as it aims to digitize its operations.

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