Travel agencies

In-store travel agency closures are on the rise


Covid-19 has accelerated the digitalization of the travel agent model, creating more store closures as in-store travel agencies switch their operations online. It is a means of general survival but a necessary adaptation according to the evolution of consumer preferences.

Only 17% of people surveyed globally in GlobalData’s Third Quarter 2019 Consumer Survey said they booked with an in-store travel agent, showing that before Covid-19, in-store booking was losing already in popularity. A more recent GlobalData survey in December 2020 found that 47% of people worldwide would buy more products online rather than going to a store and 60% would do online banking in the ‘new normal’.

The long-term survival of in-store travel agencies has been debated for several years due to the growing popularity of online reservations. Success in 2021 will largely depend on decent cash levels, an area in which online travel agents (OTAs) continue to have a leg up on traditional brick-and-mortar-style agencies, working with light commercial models.

In-store travel store closures have been numerous

Lack of income and the high demand for reimbursement have taken their toll on many traditional travel agencies. High fixed costs, including high rents, would have further depleted agents’ cash reserves in store compared to OTAs. Store closures were seen as essential for many to simply stay afloat in 2020 and some were made permanent.

STA Travel, a long-haul flight specialist with more than 50 stores in the UK, had to cease operations in August 2020 as costs piled up with little revenue. Flight Center closed 421 of its 740 stores during Covid-19. Hays Travel said it plans to make a ‘hybrid’ return to retail with the reopening of some stores and others that will remain closed against the UK government’s roadmap. Many employees said they were happy to work from home, which could lead to more permanent store closings. Tour operator TUI is the most recent to announce plans to close an additional 48 branches in 2021. That, in addition to the 166 TUI stores that were closed in 2020, leaves the company with around 314 branches in a bid to digitize its operations.

Now it comes down to survival of the fittest

The rollout of vaccinations around the world, coupled with the supposed release of digital vaccine passports has offered a silver lining for the travel industry. However, news of new variants of Covid-19, coupled with new lockdowns across Europe, suggests that 2021 will be another year far from normal.

Traditional in-store travel agencies are under increasing pressure to develop their online directories in order to remain competitive in the global market. The lower the fixed costs for travel agencies, the more flexibility they will have in managing the future travel space. Therefore, more store closings will likely follow as we move into the “new normal”.

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GlobalData is the parent business intelligence company of this website.


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