Ticketing remains the key source of
revenue for the major markets, over packaged tours, although profit
margins of the latter are higher.
Income allocation
AS expected, staff salary (47 per cent) was the biggest expense item, and in particular Taiwan spent most on staff salary (62 per cent), indicating higher staff costs in Taiwan.
Agencies also spent quite a fair share of their income on marketing/advertising (17 per cent) to sustain their business in the marketplace, especially in China where it took up 27 per cent of total agency income. Technology (15 per cent) was another major source of expense.
Staff training, however, did not take up a large share of total agency income (nine per cent).
No single market spent particularly high amounts on staff training in benchmarking the regional average. Hong Kong is already
the highest spender in staff training and it only spent a little more than others in this area (11 per cent).
Sources of revenue (new section)
Ticketing vs packaged tours
IN 2007, sources of revenue came more from ticketing (59 per cent) than packaged tours (41 per cent). Taiwan and Singapore are the two major markets with the highest proportion of revenue coming from ticketing (69 per cent) compared to the regional average (59 per cent). The retail travel market in China is very much driven by packaged tours (62 per cent revenue from packaged tours) as its people become economically better off and start to travel more.
Types of packaged tour
OF the total revenue from packaged tours, the major contribution came from shopping and sightseeing tours (61 per cent), followed by cruises (15 per cent). Other types of packaged tours have not made a large impact on revenue yet. The countries where shopping/sightseeing tours contributed the most are Taiwan (74 per cent) and Malaysia (71 per cent). Cruises are the more popular types of packaged tours in New Zealand (30 per cent) and Australia (24 per cent).
Fastest growing revenue streams
Fastest growing revenue streams are mostly seen to be in ticketing (top response of 52 per cent of all agents), the basic bread and butter of the retail agents’ business, which constitutes the bulk of their business, although with a relatively lower margin than packaged tours. Singapore (72 per cent), the Philippines (67 per cent) and Taiwan (66 per cent) place more importance to ticketing than other markets in Asia.
For packaged tours, areas considered to have higher potential are shopping/sightseeing (top two responses of 74 per cent of all agents), followed by cruises (31 per cent). Malaysia is the country which is most optimistic about shopping/sightseeing tours (top two choices of 93 per cent of all agents), while New Zealand (85 per cent) and Australia (64 per cent) are particularly upbeat on cruise tours.
Cost allocation
Because of a higher percentage of front line staff employed this year compared to the last, there is a higher cost allocation to this business area as well.
However, there seems to be a higher demand for marketing, advertising and public relations staff as there is a higher proportion of costs (15 per cent) allocated to this business area (10 per cent), further indicating an increasing emphasis on marketing activities to help drive revenue. This pattern is quite consistent across different markets.
Profit margin
Understandably, the profit margin for packaged tours is higher than ticketing although ticketing constitutes a larger share of agents’ business in 2007. The average profit margin for packaged tours is about 14 per cent, compared to about 11 per cent for ticketing.
Most agents (42 per cent) claimed the profit margin for ticketing was under five per cent. The competitiveness for ticketing is highest in India, where 92 per cent of agents claimed to have a profit margin under five per cent, which is the lowest margin in the region (7.2 per cent vs 10.5 per cent for the region). Taiwan and Thailand enjoy the highest profit margin in this business area (14 per cent respectively).
The situation for packaged tours is slightly better. Most agents (66 per cent) had profit margins ranging from six to 14 per cent, with the average being 14 per cent. The highest margin actually comes from a growing market for tourism, China (23 per cent), and the lowest margins are from the more mature and competitive markets of Australia, Hong Kong, Singapore and Indonesia (12 per cent respectively).
Average staffing levels
More retail travel agents employed up to 10 people in their company in 2007 (51 per cent) than last year (43 per cent). Australia (82 per cent) and New Zealand (92 per cent) are the largest employers of staff of up to 10 staff.
There are more retail agents that employ more than 100 people (15 per cent) than the last survey (10 per cent). China is the largest employer of staff above 100 (47 per cent), followed by Malaysia (30 per cent) and Hong Kong (29 per cent), indicating the growing importance of the retail travel market in China.
Breakdown of staffing levels
More frontline staff were employed in 2007 (63 per cent) compared to last year (56 per cent), at the expense of marketing/advertising and back office staff. This seems to corroborate the overall observation that the retail travel
market is getting more competitive as there is a higher reliance of frontline staff to bring in more business.
Australia (81 per cent) and New Zealand (79 per cent) are the two countries that employ the most frontline staff.
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