Travel agents need to evolve to stay relevant – Amadeus

Travel agencies need to look at new sources of income if they’re to thrive in an increasingly competitive Japanese business climate, said Peter Smith, Vice President of Amadeus Asia Pacific’s Business Solution Group, at a Power Breakfast in Tokyo, Japan, last week.

Speaking to 19 of Japan’s leading travel agency representatives, Smith outlined a number of the key challenges facing agencies today and said the adoption of cutting edge technology solutions would play a pivotal role in helping agencies navigate the rapidly developing local travel marketplace.

“Travel demand in Japan has recovered to pre-recession levels, however travel agents face a number of fresh challenges,” said Smith.

“To overcome issues such as mounting competition from online travel agencies, traditional agencies must look at new strategies to thrive. Amadeus is committed to helping agents compete effectively in this climate, through the provision of technological solutions to support them in their efforts.”

Smith identified three key trends currently impacting the Japanese travel sector and suggested they have the potential to create a number of lucrative opportunities for local travel agents.

Increasing popularity of online bookings

“Asia Pacific’s online travel market is dominated by Japan, China, India, Singapore and Australia. Sales in these markets are expected to experience double digit growth in 2011 – around five times the rate of the U.S. While this trend has the potential to impact the revenue of traditional travel agencies, there are a number of steps that agents can take to not only overcome the challenge, but in many instances, actually benefit from the opportunity it creates,” said Smith.

“Travel agents can utilise the internet to complement their existing businesses, by leveraging online solutions from Amadeus, which can help travel agents build an effective website, which customers can use to search and book flights and hotels” “Most travellers put a premium on convenience and quick access to information, so travel agencies have a strong opportunity to make use of technology to provide improved service and encourage greater customer loyalty.

The rise of low cost carriers

“The launch of Japan’s first local Low Cost Carrier (LCC) by All Nippon Airways (ANA) as well as AirAsia X’s announcement of their new flights to Japan, are important developments for the local aviation industry and will likely encourage significant additional competition between airlines,” said Smith. “Japanese travellers remain extremely budget-conscious following the economic downturn so low cost carriers have the potential to attract a strong following in the local market.

Established airlines will be increasingly compelled to provide more value based travel options in order to ward off competition from new market entrants.”

Proliferation of ancillary services

 “The entry of LCCs in Japan also brings the rising popularity of ancillary services firmly into the spotlight.

Though airlines in Asia haven’t embraced service unbundling to the same extent as many American carriers, it’s likely that this will become an increasingly important sales and marketing tactic in the short to medium term, as airlines look for new ways to increase revenue,” said Smith.

“Travel agencies will play a key role in driving airlines’ ancillary revenue efforts, supported by technology platforms such as the Amadeus Ancillary Services solution, which helps agents increase operational efficiency, and provide value to travellers.”

Smith concluded by reiterating that travel agencies must evolve together with the changing travel landscape.