Are Travel Agents Obsolete?

The Economist: On Thursday, President Barack Obama said this during a town hall meeting in Atkinson, Illinois:

"One of the challenges in terms of rebuilding our economy is businesses have gotten so efficient that—when was the last time somebody went to a bank teller instead of using the ATM, or used a travel agent instead of just going online? A lot of jobs that used to be out there requiring people now have become automated."

Travel agents flipped their lids. The American Society of Travel Agents wrote a letter to the White House, and Travel Leaders Group, another trade group representing travel agents, "strongly rebutted" the president in a press release. Here's ASTA's argument:

In its letter, ASTA informed the President that today, the U.S. travel agency industry "is comprised of nearly 10,000 U.S.-based travel agency firms operating in 15,000 locations. We have an annual payroll of $6.3 billion. Most importantly, our businesses produce full-time employment for more than 120,000 U.S. taxpayers."

Further, the U.S. travel agency industry:

• processes more than $146 billion in annual travel sales, accounting for more than 50 percent of all travel sold. This includes the processing of more than 50 percent of all airline tickets, more than 79 percent of tours and more than 78 percent of all cruises

• helps more than 144 million travelers get where they want to go each year.

It is true that travel agents are still a significant part of the American workforce, and $6.3 billion in annual payroll and 120,000 jobs are nothing to sniff at, especially in this economy. Suggesting that such a large number of Americans are doing a job that is no longer necessary was perhaps not the wisest move politically. But just as it's true that ATMs have changed the roles of bank tellers, so too have internet travel sites changed the travel agency industry. The number of agencies in America declined "from 32,000 in 1998 to somewhere in the vicinity of 20,000" by 2007, according to USA Today's David Grossman. The sector has seen further consolidation since then; as ASTA noted, the industry is now "comprised of nearly 10,000 U.S.-based travel agency firms."

Fewer agencies and industry-wide consolidation could be expected to lead to job losses even without technological change. The federal government, at least, doesn't foresee growth in the number of travel agents in the near future. America's Bureau of Labour Statistics projects that there will be about 1% fewer travel agents in 2018 than there were in 2008, despite population growth. IBISWorld, an industry research provider, believes that continued change in the industry will "effectively eliminate many smaller brick-and-mortar establishments," but there are good prospects for growth online.

The real challenge for travel agents going forward will be convincing younger business and leisure travellers who have never used anything other than a website to book travel that they can and should use an online travel agent. (Getting those folks to switch to using the phone or an in-person meeting to book travel seems like a lost cause.) There's a case to be made, but it won't be easy.