Demand, Supply and profitability

Let’s take 2 years of Covid out from any travel business timeline and for most of them its like starting afresh after taking the impact of Covid (assuming they have not shut down their travel business already).

There is no doubt that travel business will bounce back but IATA & aviation trade pandits estimates vary from optimistic Q4 of 2023 to 2025 and beyond. Not to mention that Ukraine war, rising aviation fuel costs have added the burden of increased airfares and logistics costs to the end customer as airlines and other multimodal transport companies struggle to recover themselves from Covid impact.

As a travel management company (TMC) in US or a tour operator in Europe or their counter parts in other developed countries – the resurgence in demand has given them hope however with supply being very limited and restricted, due to various government Covid related rules and compliances – the costs to the end customer are way beyond the levels of 2019 (pre-covid). If above wasn’t enough, teleconferencing made a big dent on business travel industry as people got comfortable using it, though human interaction can never be replaced for various reasons.

The current costs structure is not sustainable for travelers and its only urgent and mandatory travel is taking place for various businesses, while leisure travelers see slow recovery in most nations.

Clients are apprehensive of booking Online as Covid protocols are very ambiguous at times, and travelers do not bother going thru fine prints – thus the travel and tourism businesses are taking the brunt of these enquiries where lot of manhours are consumed yet they do not materialize into transactions due to either tour being disapproved or the costs are prohibitive. Many travel companies, including some of the large global international ones, are changing their business model and now charging a service fee per call/email based on the time being spent by their Customer Support agents. This is in additional to their existing management fee contracts.

Complaints of poor customer service, post-sales support are rising, many airports are see frequent flight cancellations due to staff paucity, requirement for human assisted transactions are shooting up as people need a face to talk to and not just the bots.

While travel companies are faced with rising costs, skilled manpower shortage and dwindling revenue per transaction – it’s not been easy for Travelers either. While a segment of people are desperate to travel – it’s complicated when it comes to onboard Covid policy compliance as traveling with Mask or Visor or PPE is not a piece of cake when the flight is over 8 hrs, or you have mandatory quarantine expense in few countries.

In a recent survey by a travel industry player, it was discovered that travelers now prefer to book with a live person rather than using an Online website or corporate self-booking tool. Simultaneously, the stress on a travel agency owner in US or Europe to hire more staff to take care of rising query or offer enhanced customer support or Emergency Travel desk to their corporate client cannot be emphasized enough. Either you spend on requirement of extra hands to offer customer support and retain their client on the same travel management fee or lose out the customer to one of the larger players who have deep pockets to survive. The consolidation in travel industry has been happening across various countries and some of the big large TMCs have merged in order to synergize or a Unicorn has bought few established travel companies in order to take care of offline requirements.

So when you have precarious demand, limited supply and resources – how do you stop your company from going into the Red? One viable option is to outsource your various services that have huge dependence upon human interface. There are many countries like India, Philippines, Mexico that offer Outsource Services for travel industry that are either Offshore or Nearshore.

The cost of managing TMCs Customer Support, 24/7 Emergency Support, Reservations and Operations of Travel Agency or tour operator, Financial Services including book-keeping, credit card reconciliation, After Office hours support for Travel and Tour Industry India, Post sales commission recovery etc can easily be outsourced to say India that has a good level of English language skills and qualified resources are easy to find. If you are a business travel agency, you may want to connect with Eprime Travels.com and negotiate a flexible plan that can begin with dedicated 2 seats and can be increased at short notice.

One has to think out of the box and rather than increasing your operating costs of travel agency…look for outsourcing of all travel agency services and operations to a 3^rd party and just focus on your core activity of keeping your clients happy and look for new ones!

Travel industry, as we speak, is undergoing huge transformation and offers plenty of space for innovation. As they say “Early bird catches the worm!” – we recommend that you re-assess your business and save costs by outsourcing few activities to begin with and if it does indeed make a difference to your profitability – then fine tune your requirements and the SLAs that will make the job easier for you to find a partner in India that is efficient, organized and understands your travel agency requirements. You will see profits soon!