Arrangement of Passenger Transportation, NEC

More than 165,000 people were employed in travel arrangement and reservation services in 2008, managing nearly $200 billion of the U.S. travel industry. According to the American Society of Travel Agents, 85 percent of cruises, 80 percent of tours and packages, 50 percent of airline tickets, 45 percent of hotels, and 45 percent of car rentals were arranged by travel agents during the late 2000s.

The number of agencies accredited by the Airlines Reporting Corp. (ARC) increased from 6,911 in 1970 to 33,593 (excluding satellite ticket printers) in 1995. Total agency sales grew remarkably during that period, from $5 billion to $101 billion. Just a decade later, in 2005, there were 21,486 agency outlets listed by the ARC, selling $62.5 billion in airline tickets alone, 31 percent of all agency sales that year, continuing a decline begun in 1993 when 60 percent of agency sales came from air. Totals dropped below 50 percent in 2001 and were down to 33 percent in 2004. As of 2008, approximately $80 billion in travel was arranged through ARC member agencies.

Consolidation in the agency business was a major trend beginning in the 1990s. In 1992, the ten largest agencies reported a cumulative $18.3 billion in sales at their U.S. locations, according to Travel Weekly. In 2005, the top 10 recorded sales of $99 billion, based on combined results in the United States and overseas. Less than one percent of ARC agency businesses accounted for more than 57 percent of all sales in early 2006, while nearly 89 percent of ARC agencies sold just over 10 percent of the total.

Another trend, beginning with the explosion of Internet use in the 1990s, was the online agency. In 2008, four of the top 10 largest travel agencies did their business online: Expedia, third overall with $21.3 billion in sales; Travelport (which owns Orbitz), sixth overall with $10.8 billion in sales; Travelocity, seventh overall with $10.6 billion in sales; and Priceline.com., tenth overall with $7.4 billion in sales. Interestingly, staffing costs, the largest expenditure of conventional travel agencies, is just as large an expense for online agencies, which typically employ high-priced technology hardware and software experts, travel counselors, and call-center service workers (most often outsourced). Additionally, as large credit card merchants, online agencies face significant expenses by paying merchant fees and facing losses from fraud. Marketing is the largest expense faced by online agencies, ranging from national advertising campaigns in traditional media to links, banner ads, and other online marketing tools.

American Express, long an industry leader, posted sales of $29.1 billion in 2008, but was being challenged for the industry lead by Carlson Wagonlit (CWT), a privately-held Minneapolis firm that posted $27.8 billion in sales in 2008. In the summer of 2006, CWT purchased Navigant International, which raised projected annual sales for 2006 to $23 billion, up from just over $16 billion the year prior. Other industry leaders included BCD Travel of Atlanta ($12 billion in sales), formed as a result of international mergers and acquisitions integrated into U.S.-based WorldTravel BTI, owned by BCD Holdings; NRG North of New York ($12 billion in sales), a subsidiary of U.K.-based Hogg Robinson, which changed its name to HRG and acquired Sea Gate Travel Group of New York and Robustelli Corporate Services of Stamford, Connecticut; and AAA Travel ($3.7 billion in sales), a not-for-profit corporation also involved with Pleasant Holidays and American Tours International.

The industry is influenced by trends and demographics within the United States and foreign travel markets. By the mid-1990s, U.S. travelers took nearly 1.1 billion personal trips annually. This figure showed a marked decline after the terrorist attacks of September 11, 2001, but the travel industry as a whole had recovered by 2003. In addition to U.S. travelers, the industry benefits from international tourism in America. Expanding international tourism--one of the largest sources of foreign dollars flowing into the U.S. economy--was expected to continue to benefit this industry into the second decade of the 2000s.