Canada Association of Tourism Employees

Closure of in-store journey companies marks turning level in journey retail

The lack of revenue and the high demand for refunds have plagued many traditional travel agencies

  • High fixed costs including high street rents would have used up the cash reserves for shop sellers
  • For many, shop closings were seen as essential to simply staying afloat
  • More store closings are likely to follow as the world enters what is known as the “new normal”.

COVID-19 has accelerated the digitization of the travel agency model and created more store closures as branch agencies switch operations online. This is a necessary adaptation to changing consumer preferences.

The long term survival of travel agents in business has been debated for several years due to the increasing popularity of online bookings. Success in 2021 will largely depend on good cash flow. In this area, online travel agencies (OTAs) remain one step ahead of traditional stationary-style agencies thanks to their low-wealth business models.

Only 17% of global respondents in the third quarter of 2019 consumer survey said they had booked in-store with a travel agent. This shows that in-store booking was already losing popularity before COVID-19. A recent survey in December 2020 found that 47% of respondents worldwide would buy more products online instead of visiting a store, and 60% would do banking online in the “new normal”.

The lack of revenue and the high demand for refunds have plagued many traditional travel agencies. High fixed costs including high street rents would have further depleted the cash reserves for branch agents compared to OTAs. Store closings have been seen as essential for many to simply stay afloat in 2020, and some have been made permanent.

STA Travel, a long-haul airline specialist with more than 50 stores in the UK, was forced to cease trading in August 2020 as costs rose at a time when there was little income. Flight Center has closed 421 of 740 stores during COVID-19, while Hays Travel has stated that a “hybrid” return to retail is expected, with some stores reopening and others remaining closed on the UK government’s roadmap. Many employees have stated that they enjoy working from home, which can lead to more permanent store closures. Tour operator TUI was the youngest to announce that it plans to close another 48 branches in 2021. In addition to the 166 TUI branches that were closed in 2020, the company has around 314 branches to digitize its activities.

It now boils down to surviving the fittest. The global rollout of vaccinations coupled with the alleged publication of digital vaccination records has given the travel sector hope. However, news of new variants of COVID-19 coupled with persistent lockdowns across Europe suggests that 2021 will still be a far from normal year.

Traditional in-store travel agents are under increasing pressure to develop their online directories in order to stay competitive in the global marketplace. The lower the fixed costs for travel agents, the more flexible they will be in maintaining the future travel space. Therefore, more store closings are likely to follow as we enter what is known as the “new normal”.

Post a Comment

You don't have permission to register