05 April 2008

ASTA says Travel Agents are doing OK

ASTA just released a report on the Financial health of the US Travel Agent community. Even though it took them a year to publish the findings - I hope that wasn't to get rid of unflattering information.

ASTA is doing a good job in trying to keep the Agency community psyched up on the one hand and the consumer protected on the other. Despite having a job that is akin to putting fingers in the dyke - they continue to put on a brave face.

But the role of an agent has forever changed. It is doubtful by looking at these numbers that the agent model is sustainable at anything but a niche business.

Here is the full text of the Press Release.

ASTA Releases 2nd Annual Financial Benchmarking Report
Alexandria, Va., April 3, 2008-ASTA today released its second annual Financial Benchmarking Report, the results of which provide travel agencies with data that can be used to pinpoint areas of excellence, as well as areas which can be improved. Among the key findings, the report discovered that of those surveyed, the majority (75.6%) were profitable in 2006 and similarly expect to be profitable again in 2007 and 2008. The average profit (as defined by percentage of revenue) reported for 2006 was 7.1 percent, and forecasts for 2007 and 2008 show stronger profits are expected. The study, which Premium members receive as part of their membership package, is the only industry report of its kind to specifically examine travel agency financial benchmarks, including revenue sources and annual travel agent revenue

"ASTA is an industry leader in developing and analyzing studies that get to the very heart of what it takes to be successful in an increasingly competitive industry. The results of this report will help travel agencies maximize their earnings by showing them the most profitable revenue mix," said Cheryl Hudak, CTC, ASTA president and CEO. "Armed with this kind of data, agency owners and managers will be able to determine whether their agents and independent contractors are generating revenues at a competitive level."

Not surprisingly, the study found that labor and rent are the two largest areas of operating expenditures. Employee salaries and benefits alone represent 49.6 percent of operating expenses, although that percentage varied, anywhere from 41.5 percent to 59.0 percent depending on the responding agency's regional location. As such, rent and labor represent the two best options for agencies looking to improve their financial situation, either by cutting expenses or, as in the case of labor, increasing revenue through increased productivity.

Among other findings:

On average, respondents have 9.8 Full-Time Equivalents (FTEs) in their agency. The median was 4.8 FTE.
73.6 percent of those surveyed reported that they sell primarily leisure-based travel.
With respect to commissions and service fees, base commission revenue was the primary source of revenue for cruises and tours, while when examining non-air travel segments, only car rental revenue comes primarily from service fees.
Revenue from transactions and service fees was the largest source of ARC and non-ARC revenue for airline bookings.
For air bookings, 16.6 percent of ARC revenue was derived from international flights.
The full report is available for purchase for $950 to non-members. ASTA Travel Agent members receive a complimentary 2-page summary of the report; those interested in receiving the full study receive a substantial discount and pay only $350.

The study was conducted in May 2007 and polled ASTA's Research Family, a group of 491 travel agents. The survey has a 95 percent degree of confidence with an error rate of +/- 6.

ASTA's (American Society of Travel Agents) mission is to facilitate the business of selling travel through effective representation, shared knowledge and the enhancement of professionalism. ASTA seeks a retail travel marketplace that is profitable, growing and a rewarding place to work, invest and do business.

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