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Home > Consumer Products > Consumer Products & Retail > Travel and Leisure
Travel Agencies and Services
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| Published Date:
November 2008
Published By:
First Research, Inc.
Page Count:
10
Order Code:
R3470-2050
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The US travel service industry includes about 20,000 companies with combined annual revenue of $25 billion. Large companies include the travel agency operations of American Express, and Carlson Wagonlit Travel; Travelocity.com; and Expedia. The industry is fragmented: the 50 largest companies account for about 50 percent of industry revenue. A typical traditional agency office has 12 employees and $1 million of annual revenue.
Travel agencies frequently mention their sales volume or "bookings," the value of the tickets they purchase for customers, a figure much higher than the actual revenue they receive in commissions.
COMPETITIVE LANDSCAPE
Demand is driven by business and tourist travel, which depends on the economy. The profitability of individual companies depends on marketing. Large companies have an advantage in being able to provide a wider range of services, especially to corporate customers, and to afford sophisticated websites. Small companies can compete effectively by providing service to a few large customers or by serving a local market. Despite automation, the industry remains labor-intensive; average annual revenue per employee at traditional travel agencies is just $75,000.
Two major factors have shaped the industry in recent years: sophisticated pricing schemes developed by the airlines to maximize profitability, and the emergence of the Internet as a widely available information and booking tool.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major services are reservations or tickets for airline flights, tours, hotels, and entertainment. Airline reservations account for about 25 percent of industry ...
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