ASTA: Revenues Higher But Profit Ratios Lower For Corporate Agencies

A recent American Society of Travel Agents survey found that just over half of polled corporate travel agencies saw first-half 2014 revenues increase from the prior-year period. Meanwhile, profits as a percentage of total revenue, in aggregate, are expected to show modest improvement this year and next.

Fielded in July 2014, the ASTA survey drew responses from a total of 232 ASTA members, 28 of which are corporate agencies (with at least 70 percent of volume generated by corporate travel). While 28 agencies isn't exactly a huge sample, the findings released last week nevertheless are worth a look.

The 52 percent of corporate agencies that indicated their first-half 2014 revenue increased compared favorably to the 47 percent of all 232 participating agencies that said as much. That 52 percent, though, is down from the 65 percent of corporate agencies that responded to a similar January ASTA poll which indicated full-year 2013 revenue was higher than in 2012.

"Independent agents and corporate agencies reported the strongest performance gains in the first half of 2014," according to an ASTA statement. "Retail leisure agencies lagged behind the other two segments with only 44 percent of agencies reporting increased revenue. This is the first time in several years that retail leisure didn't report equal or better performance, suggesting that retail leisure gains may be leveling off after several robust years."

Profits as a percentage of total revenue were about 7 percent in 2012 for participating corporate agencies. That fell back slightly to 6 percent last year but is projected to return to the 7 percent level this year and rise again to 8 percent in 2015. In each of those years, figures for corporate agencies are lower by a percentage point or two than that of the overall sample of mainly retail leisure agencies.

Looking at sales volume, tour/group sales was the area in which the largest number of corporate agencies (48 percent) reported a year-over-year increase, compared with individualized itineraries (38 percent). Also ranking high on the list were insurance sales (cited by 40 percent as having increased) and air sales (35 percent). Rail ranked last, with 10 percent of corporate agencies reporting an increase in first-half 2014 sales.

On the flip side, 39 percent of corporate agencies reported declining hotel sales and 41 percent reported lower car-rental sales.

Across the entire survey base, 45 percent of agencies indicated that first-half transactions increased versus the same period in 2013, and 43 percent reported growth in the size of their client bases.