Travel Agents R.I.P.? - Ellison Poe of Poe Travel

Not so long ago, everyone thought offline travel agencies would go the way of the Pullman car and the trans-Atlantic cruise. Looks like everyone was wrong.

Ellison Poe remembers the hours she spent on the phone. Back in 1991, when she was just one of 20 agents at Poe Travel, the agency her parents ran in Little Rock, Ark., she'd spend the better part of every day with the handset jammed against her ear, returning client calls and reserving airline tickets, rental cars, hotels and vacation packages. During Muzak interludes, she'd write out tickets by hand, and a staffer would deliver them at the end of the day. To book a hotel room in Florence or a rental car in Stockholm, Ellison would type her request into a telex machine, then wait -- usually days -- for a confirmation.

Now president of the family business, Poe has upgraded her technology, but she's still tethered to it all day. She starts each morning by checking her e-mail -- from the Carlton InterContinental in Cannes, France, confirming a reservation for four at its Beach Restaurant; from the Casa Schuck in San Miguel de Allende, Mexico, acknowledging a reservation for a garden tour; and from a random Web surfer who chanced upon Poetravel.com and wants to visit a dude ranch with a golf course nearby for her 50th birthday.

The rest of the day Poe, like her 34 staffers, is on the Web, checking Irish B&Bs; booking air tickets, hotels, cars and vacation packages via Sabre (the online reservations system); and notifying clients when their e-tickets are ready. Of course, she still spends some time on the phone -- to stay in touch with important clients and head off the occasional catastrophe. "I have this VIP who wants to go on his honeymoon in May to Italy," sighs Poe. "May in Italy is impossible, so I called [him]."

Poe is awfully busy for someone who should have been drummed out of business. Pundits have been predicting the demise of the travel agency for years. "Travelers take flight to the Net," announced CNET in 1997. "Travel agents scramble as customers go online," declared the Associated Press two years later. "Travel agents losing sales to Web," reported the Los Angeles Times just last year.

"No question about it, there was nothing but doom and gloom," recalls Richard Copeland, president of the American Society of Travel Agents, recalling the days when the Net first emerged as a threat to the travel industry's status quo.

To be sure, the travel business has changed dramatically over the past six years. An estimated 10 percent to 20 percent of U.S. travel agents have gone out of business. The exodus began in 1995, when airlines began cutting agents' ticket commissions. Over the next three years, fees dropped from 10 percent for every ticket booked to 5 percent. The kicker: That 5 percent was capped at $50 a ticket, even if an agent booked a $22,000 Paris-to-New York flight on the Concorde.

At the same time, Web sites like Expedia, Hotwire, Priceline and Travelocity arrived, stealing business from offline agents. Online bookings have been gathering steam. In 2000, they were up 110 percent for Travelocity and 117 percent for Expedia. Travelocity expects to be profitable by June; Expedia projects profits in early 2002.

While many Main Street agencies wilted in the face of these threats, Poe and others like her have survived and even thrived. They've put to their advantage the very technologies that might have run them out of business. That could be why Internet travel sites accounted for just 8 percent (or $20.2 billion) of all travel sold in 2000. Online competitors, it turns out, have one real flaw: In travel, perhaps more than any other retail business, customers want to talk to a human being.

And those customers are willing to pay for that attention. To compensate for the loss of airline commissions, Poe started assessing service fees: "We were already charging fees for corporate travel, and we started charging for leisure." For a domestic ticket she tacks on $20, for an international ticket $30, and for an upgrade or to exchange frequent-flier points for a free ticket the fee is $100. For extensive planning services, Poe's agents charge $100 an hour, plus the expense of telephone calls and faxes.

Poe is also diversifying. In 1993, she began to book more hotels, rental cars, cruises and vacation packages, which bring in commissions of 10 percent to 15 percent. The results have been impressive: Ten years ago, 60 percent or more of her agency's revenues came from booking flights. By 1999, that figure was down to 28 percent.

To combat the Web, agents have been forced to specialize. Poe runs down her roster: "Sally Blewett knows Ireland and Scotland better than anybody alive. Glare Graham probably knows France better than anybody in the industry. Linda Brown knows Italy, Turkey, Austria and Eastern Europe. My area of expertise has become East Africa."

This kind of expertise is what travel agents believe gives them a competitive edge over Web-based automatons. "All I have to do is talk with you for 15 or 20 minutes and I'll know where to put you in Venice," boasts ASTA president Copeland. "A Web site might give you a $600 room for $500, and that looks like a bargain. But you may be able to go around the corner for $200 with breakfast included."

As offline agents find ways to stay relevant, online competitors such as Expedia and Travelocity face their own crunch. Northwest and KLM recently withdrew all commission agreements with Internet agents. If other airlines follow suit, the online sites may have to start adding service charges to stay profitable. They also face competition from Orbitz, the major carriers' Web service, due to launch in June (assuming it passes muster with federal antitrust officials).

Many consumers have settled into a routine. They use travel Web sites to look up flight schedules and prices, then turn to offline agents to book the trip. "How comfortable are consumers spending $8,000 for a vacation online?" asks Kate Rice, an analyst at Phocuswright, a travel industry research firm. "Online agencies haven't established deep customer loyalty." For example, a Phocuswright survey of travelers who use online sites found that 20 percent couldn't recall the name of the sites they visited. "On the other hand," Rice says, "I'll bet those same people remember the name of their travel agent."

In fact, the Internet has become a powerful marketing tool for agents like Poe. "Only 10 percent of our clients are local now," she says. "The rest come to us from referrals, word-of-mouth or our Web site." Last June, E-Gulliver.com, a Web site that connects prospective travelers with geographic specialists, put out a call to agents asking them to register their names and specialties on its Web site. "We were expecting 160 agents to sign up with us by the end of last year," says E-Gulliver CEO Deslie Webb. "But we have more than 1,600."

"There are a lot of people who have money but not time," says Poe. "When you pay for my time, I'm going to give you something of value." For travelers who want to know just how beautiful a Venetian sunset will be from the balcony of that room with a view, a real live agent -- not a search engine -- is still their best bet.

Linda Weber is a writer in San Francisco.

COPYRIGHT 2001 Standard Media International
COPYRIGHT 2001 Gale Group