The Travel Authority Group’s CEO, Peter Hosper, was recently invited to address an audience hosted by Helm Advisory Chartered Accountants in Sydney.
Peter was asked to present the story behind The Travel Authority’s success, to describe the state of the travel industry, and ponder the immediate and longer term future of this massive industry.
It was an address with a serious message, delivered in lederhosen—a nod to Peter’s homeland. Despite being assured the event was ‘fancy dress’, Peter was mightily relieved to see others had gone to the effort, too.
Below is his speech.
Ladies and Gentlemen,
My name is Peter Hosper, and I am the Co-Founder and CEO of The Travel Authority Group, and I am here tonight to talk about travel.
We live in very strange times, and with all our international and even most of our domestic borders currently being closed, I am sure at least some of you might be thinking “What could he possibly have to talk about?”
When our host Stephen Hathway asked me to join tonight’s event, given his line of work as a liquidator, even I was wondering if he was trying to drum up some new business. After all, the travel industry is all but dead, right?
Seeing that Stephen and I go back more than 25 years, I felt I could be honest and I asked him outright, and his answer was: “No Peter. I want you to tell your story.”
So that’s what I’m here to do tonight. And the first thing I need to say is that the travel industry is definitely not dead.
Like many other industries, however, we are going through tough times. But uniquely, the travel industry was the first to be hit hard directly, and it will be the last to recover. So essentially, we are in the longest ongoing lockdown of them all!
So how did we get here? The one thing our entire industry agrees on is that we are very much used to a constant level of turbulence. You can rest assured that our seatbelts are always fastened.
When we launched The Travel Authority nearly 17 years ago, we were a business that concentrated purely on corporate travel, the internet was coming into full swing, as were smart phones and with them—excuse my language—many smart asses!
It was those smart asses that declared travel agents dead there and then, because everybody would NATURALLY go online, do their own thing in a couple of clicks, and not bother with so-called “the middle man”. The airlines were very quick to capitalise on this sentiment and reduced our commissions overnight – in some cases down to zero, so our revenue was suddenly reduced substantially. And we were just starting up.
RIP Travel Agents. Good bye. Auf wiedersehen!
But to paraphrase Mark Twain, reports of our demise were greatly exaggerated.
To be fair, the industry did have to reinvent itself. Perhaps not unlike accountants and financial advisers (and possibly liquidators?) had to at some stage. And we did. Fast.
We started by putting actual value on the services we provided, and instead of relying on being solely paid by the airlines and other suppliers by way of commissions, we introduced service fees, to be paid by our clients. What a novelty! For us, it really was.
Sure, some agents didn’t make it, or simply found the transition too difficult and got out. But for those of us who embraced the change – we became more profitable, more independent and ultimately, we became better at our job, because we had to demonstrate value for what we were charging.
We also became more powerful, because we were now working for our clients and not our suppliers – the way it should be, really.
So The Travel Authority started growing. We established ourselves as Corporate Travel Specialists and in the same year opened our Resource Travel Division in Western Australia, looking after FIFO workers travelling to and from Oil Rigs. We absolutely LOVED our corporate clients, and they loved us back. So much so that they now also wanted to book their holidays with us.
But we weren’t really set up for this, so we started our Holiday Division – The Holiday Authority, followed by The Events Authority to look after our clients’ Conferences, Incentives and Events, and of course The Cruise Authority – who would have thought that “Cruising” would be a dirty word in 2020? I’ll come back to that…
Things were good. Very good in fact. The Australian Economy was growing, and we were growing with it, and before we knew it we had 4 offices, 50 staff and plenty of work. Even during the Global Financial Crisis we were so confident about our business that we actually guaranteed all our staff their jobs for 12 months minimum – a big gamble that played out very well for us.
Fast forward to 2019. Our business is still growing, Australians continue to travel for business or pleasure in huge numbers, and the Australian Cruise Market is the fastest growing cruise market in the world. Cruise Lines are positioning more and more ships in our region, and we were playing our part in filling them up very easily. Australians are great world travellers, so they also represent a substantial percentage of cruise travellers worldwide.
The Council of Australian Tour Operators’ (CATO) released its inaugural ‘Australians on Holiday – International Leisure Travel Trends’ report in 2019. It showed that in 2018, Australian holidaymakers:
- Took 6.3 million overseas leisure trips
- Spent more than 46 billion dollars in total at an average of AUD$7,300 per person
Overall, more than 70% of all travel booked in Australia is transacted through travel agents and travel management companies like The Travel Authority, and just this segment of the travel industry contributes more than 28 billion dollars towards the Australian economy.
Plus, did you know that travel agents employ 40,000 Australians in metro and regional locations.
And we were all declared dead in the early 2000s, remember?
So here we are, 2020. The economy was showing some signs of weakness, and there was talk about ‘this virus’. We were ready for another challenge – after all, we had been through SARS, Swine Flu, the GFC.
How much worse could this covid-thing be?
Well, as it turns out, a lot worse.
As everybody in this room experienced, the world was suddenly a different place. Cruise ships became super spreaders—or ‘petri dishes’ as the media liked to say, airlines grounded their entire fleets, and borders started closing, even within Australia. I don’t know about you, but when the domestic borders were shutting, I thought, Oh crap.
It didn’t take much to realise that we most certainly weren’t going to have any growth this year, but nobody was prepared for what was coming. The thing we specialised in, travel, essentially ceased to exist overnight. We had nothing to sell. Literally! OK, I said to myself, let’s prepare for that.
Next stop: Cancellation Town.
Clients understandably wanted their money back for trips that could no longer happen. Travel Management Companies act as agents, so in nearly 100% of the cases, this money was already sitting with the supplier, such as airlines, cruise lines, hotels and car hire companies etc.—often in bank accounts outside Australia. Imagine a system that is designed for the flow of payments in one direction being put into reverse – it simply couldn’t cope, because it wasn’t designed for that. What a mess!
In the months since, travel agents have never worked harder for their clients, at best changing bookings to next year or the year after. Or, at worst processing cancellations, fighting with multiple suppliers to secure refunds and processing them back to the clients.
We are talking about over 10 billion dollars that are being refunded to Australian clients. The most recent estimate suggests that 6 billion has been refunded, only 4 billion to go.
That money that will go back into the economy, but only if we, as an industry, are able to continue facilitating those refunds—something, we think, the federal government is only just realising through the advocacy of the Australian Federation of Travel Agents.
The refund process was and continues to be slow.
Oh, and by the way, nobody in our industry is being paid for this service we’re providing to their clients. On the contrary. Where we had earned a commission on a booking last year, and that booking now had to be cancelled, we had to hand back that commission this year. You must be thinking by now – what a fabulous industry to be in!
And then there was the exposé of outrage pedalled by a not-to-be-named-but-regularly-shamed ‘current affair’ program, if you can call it that, not understanding how our industry works and painting a rather regrettable picture of travel agents and how they are greedily holding onto the clients’ money. But we dealt with that as well.
Another thought that’s been rattling in my head since our national carrier grounded all international flights: Here we are, an island nation and every person living in it, being 100% reliant on foreign airlines to get in or out – once we are allowed of course. Food for thought.
Back to the travel industry. Still not dead. Not even close.
After the trauma of the last few months and despite everything I’ve just said, we are in the process of dusting ourselves off and looking towards a very bright future. Some people really do think I am crazy when I say this, but if you need any proof of how much Australians are itching to travel again—what Qantas CEO Alan Joyce refers to as ‘pent up demand’—consider this:
- How long do you think it took Qantas to completely sell out a 7-hour sightseeing flight to nowhere? Go on, guess. 10 MINUTES! Some clients paid nearly $4000.00 for the pleasure.
- A recent three-day Jetstar sale saw 150,000 tickets sold at a record rate, literally a record rate, of 220 bookings per minute.
- Only last week, a cruise line put its world cruise on sale for 2022. It took 48 hours to completely sell out the entire world cruise. The cheapest cabin was $200k.
But it’s not just conventional travel transactions like these that point to that pent up demand.
- In September, Qantas sold 1,000 wine-stuffed bar carts, at between $1000-$1500 a pop—from its retired 747 fleet in just 2 HOURS.
- Japan’s ANA has been using an Airbus A380 superjumbo that usually flies to Honolulu for a 90-minute Hawaii-themed flight-to-nowhere.
- In Singapore, Singapore Airlines is offering a genuine First Class or Business Class dining experience in the comfort of your own home. It’s topped off with First Class or Business Class amenity kits, welcome videos, and instructional guides on how to heat and plate the dishes. There’s even a specially curated playlist to recreate your SIA onboard experience at home.
It doesn’t stop there…
- Also in Singapore THIS COMING WEEKEND, the airline is welcoming diners aboard its A380s—on the ground—who will enjoy “a memorable dining experience in your choice of cabin class, topped with our award-winning service.” You can even watch a movie while you dine. AND GUESS WHAT? They sold out FOUR A380s in THIRTY minutes.
- Closer to home, overnight flights to see the Southern Lights over Antarctica in April-May next year are going like hotcakes too.
I rest my case.
Oh, and if you’re sick to death of Zoom meetings and worried about never travelling anywhere fabulous for business ever again, you’ll love the findings of recent research by Harvard University’s Growth Lab. According to the study, physically mobilising the ‘knowhow in brains’ through business travel boosts the global economy enormously. We could all use a bit of that right now.
By the way, If anyone here needs the link to that article to show their boss, come and see me after.
So today, we actually do want to talk about the future.
For the travel industry, the future will mean we have to reinvent ourselves again. And we will. We will continue to love our clients and deepen the relationships we have with them, perhaps re-frame how we work with and pay our suppliers, and continue to deliver value at every client touchpoint.
We will emerge from this nightmare maybe a bit leaner—as we have from all the others—but also stronger. Judging by my own team, there are so many talented specialists in our industry who will be there when the madness is over and who can’t wait to be of service again when the time is right.
Australians will continue using Travel Management Companies with confidence.
Thank you Stephen and Helm Advisory for inviting us here tonight, and to all of you in the room, thank you for listening to our story. And please remember, when you’re ready to release a little of your own pent-up-demand once the borders are open, let us love you too!