Agency business models are increasingly changing with some agents experimenting at selling Linked Travel Arrangements (LTAs), a category of booking created last month by the new Package Travel Regulations (PTRs).
Abta financial protection and financial services director John de Vial said: “Agents are choosing more-complex business models.
“We’re seeing a steady migration to mixed-business models because the margins are greater. It’s a sensible way for agents to develop their business. Abta is seeing more dual members and dual members tend at heart to be retailers.”
In June, Mark Tanzer, Abta chief executive, reported “a big growth in dual membership”.
The new PTRs and LTAs are driving some of the change.
De Vial said: “When a consumer books a flight, most agents try to sell additional stuff. The agent’s margin is going to come from the other stuff. Some of that activity will fall within the package regulations and some within LTAs. We are seeing changes.”
But the trend is not solely driven by the regulations. De Vial pointed out: “Agents doing Flight-Plus was a longer-term trend, [although] Flight-Plus has been abolished [aside from] legacy bookings moving through the system.”
He said: “We’re seeing [agents] take different strategies. A lot are carrying on as before. Some will recognise they achieve lower margins from acting only as retailers but won’t want the risk involved.
“Some will say ‘I may as well take the role of organiser’. They’re embracing the changes, saying ‘If it’s an LTA anyway, we’ll make it a package’, [telling customers] ‘Book it all now and have these additional protections.’”
At the same time, De Vial said: “I’ve seen some [agents] do no follow-up call until 24 hours [after an initial booking] because they want to avoid selling a package.
“We’re seeing all this go on. I’m sure we’ll see some people changing [their model]. I’m sure we’ll see changes in selling systems to support this. But it’s too early to know how it will settle out. My guess is we’ll have to go a year or 18 months before we see.”
LTAs at a glance
• A Linked Travel Arrangement involves “at least two types of travel service for the same trip or holiday” concluded by “separate contracts with the individual service providers” where a trader:
a) “Facilitates the separate selection and separate payment of each travel service [in] a single visit or contact with a point of sale”;
b) Facilitates “in a targeted manner, procurement of at least one extra travel service from another trader [within] 24 hours [of] confirmation of the first travel service”.
• A ‘trader’ can be a retailer (agent or OTA) or a travel organiser (formerly known as a ‘principal’).
• ‘Travel services’ comprise: transport, accommodation, car (or other vehicle) rental, and “any other tourist service” ‘material’ to the booking, such as event tickets.