Li, whose company specializes in inbound travel services in Australia, could not help complaining that travel agencies are now being looked down upon by hotels.
He said that when recently trying to book hotel rooms for clients, he discovered that the rates offered to him were actually higher than those available to individual travelers.
“Travel agencies typically pay around 5% more than individual guests. When platforms such as Expedia run promotional campaigns, the price gap can widen to as much as 30%.”
Beyond unfavorable pricing, room allocations have also become increasingly restrictive.
Li said that many hotels in Perth, Western Australia, impose strict limits on the number of rooms travel agencies can book, with specific controls over both room types and quantities.
Booking through online platforms, however, brings another headache: cancellations and changes. Li pointed out that some hotels require requests to change or cancel group bookings to be submitted at least 60 days in advance, while individual travelers can make such requests just one week ahead.
As group rates routinely exceed those available to individual travelers, inbound tour operators, accustomed to making slim margins from hotel room markups, are suddenly finding themselves among the least welcome customers in the global hotel industry.
Caught between increasingly demanding hotels and discerning middle-class travelers, traditional travel agencies are seeing their room to operate rapidly shrink.
If they insist on maintaining conventional sightseeing itineraries, inbound operators sourcing upscale hotels must absorb the steep price gap between group and individual rates. Their already-thin margins on package tours are simply insufficient to cover the rising accommodation costs.
Yet passing those higher procurement costs on to customers is hardly an option. Price-sensitive travelers can easily turn to various platforms to book their own independent trips.
Recognizing this reality, overseas inbound tour operators are being forced to restructure their businesses, with their offerings increasingly diverging towards opposite ends of the market.
In the budget segment, pragmatic operators are simply bypassing international hotel chains and turning instead to locally owned motels on the outskirts of cities or suburban business hotels.
After all, customers booking budget tours are primarily looking for value for money and have few expectations when it comes to hotel brand prestige. As long as the rooms are clean and tidy, they are generally satisfied, creating a more mutually acceptable arrangement for both sides.
At the premium end, meanwhile, bespoke travel agencies are fundamentally reshaping their business models to adapt to the realities of the overseas accommodation market.
Rather than trying to negotiate rock-bottom rates with luxury hotels, agencies serving high-net-worth clients are increasingly booking sought-after accommodation, such as suites with exceptional views and secluded luxury wilderness camps, at publicly available market rates.
They are shifting their focus towards earning revenue from itinerary planning fees and exclusive local experiences that are difficult to replicate.
