Wednesday, November 17, 1999

Hawaii travel
agents feeling
profit pinch

Many are charging fees
to compensate for airline
commission cuts and
online competition

From staff and wire reports


Travel agent is not yet an endangered occupation. But with Internet competition and drastic cuts in commissions rocking the industry, those who can't adapt are fast going the way of the door-to-door milkman.

It's the public who will suffer from the loss, says Sharon Lester, president of International Travel Service in Honolulu.

Airlines have recently lowered the commissions they pay travel agents to a cap of 5 percent of the ticket price, she noted.

"The commission cuts have hurt dramatically," Lester said. Her agency, which does a lot of business travel bookings as well as working with individuals, has done what most agents across the country have done: charge fees for services.

"We're looking at how we do this so it works for everybody. In depends on the clientele," she said. Some are charged a $15 fee for processing a booking and a $25 fee if they change the booking and a new ticket has to be issued.

Lester, who is also the spokeswoman for the Hawaii chapter of the American Society of Travel Agents, said some customers understand what they get from travel agents and accept the fees. Others who are hit with the fee for the first time don't like it, she said.

But Lester defends her profession as a valuable service to travelers. "We save you a lot of time. We also do things that the airlines don't do. We notify you when fares go down. Airlines won't."

As for the Internet, Lester said travel agents are convinced they can do a better job, much faster and at a better price than an individual can find online.

"I have a friend who is very computer savvy and he says we can do it faster," she said. "There are people who say we are an endangered species but I say, if we do go, the public is in real trouble."

Despite the booming growth of leisure travel, hundreds of "brick-and-mortar" agencies -- those with offices rather than Web sites -- have gone out of business nationwide as travel agents struggle to survive the one-two punch of airline commission cuts and online competition.

On Chicago's North Side, longtime agent Josie Stachurski has seen five or six other agencies within a 10-block radius vanish.

"A lot of people were getting into the business because it was relatively easy to turn a profit," said Stachurski, manager of the Continental Travel agency. "That's no longer the case."

But analysts say the traveling public ultimately wins out, getting a chance at good deals from online price wars as well as better service from the agents who survive the crunch. And if you're hunting for something besides the best air fare, travel agents who are reluctantly shifting away from the increasingly less-lucrative airline ticket business are focusing more on other areas.

"If you want to do, say, a bike tour in France, you'll be able to find an agent who's a specialist at that now," said Seema Williams, an analyst for Forrester Research in Cambridge, Mass. "You're going to find an increasingly expert, specialized agent."

According to the Airlines Reporting Corp., the number of travel agencies dropped 5 percent from 30,300 in 1997 to 28,800 last year, the lowest level since 1986.

Behind the decline is the same factor revolutionizing other businesses: the Internet. Dozens of travel-oriented Web sites have appeared since 1995, including the popular Expedia, Preview Travel and Travelocity.

Online travel is expected to account for just 4 percent of all airline ticket sales and 3 percent of overall travel bookings in 1999. But by 2003, online travel sales are projected to quadruple to $16.6 billion, according to Jupiter Communications, a New York e-commerce research firm.

Star-Bulletin reporter Russ Lynch and the
Associated Press contributed to this report.

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