A decade ago the obituaries for bricks and mortar travel agents were starting to appear.
But they've proven way off beam. The thought that travellers would do it all themselves and book through online travel agents (OTAs) hasn't played out.
In New Zealand Flight Centre has posted a record year for revenue. The company is growing and its big competitors House of Travel and helloworld are also reporting strong results and looking to expand the billions of dollars of business they're already doing.
Instead of circling the wagons and waiting to be attacked by the digital newcomers, OTAs, Expedia, Priceline and now Google, the big three are all embracing consumer online booking but also playing to their own strengths - having experienced people in stores or on the end of a phone.
The incumbents have big overheads, employing about 5000 staff in New Zealand and paying big store rental bills compared to the OTAs which have just several hundred people here.
So the incumbents have adopted blended models, an example of "if you can't beat them, join them".
And a boom in travel, particularly in the past three years, has also helped increase the multi-billion dollar pie - up to $10 billion last year - for all to share. New airlines in a market often work closely with traditional agents to boost their presence.
Air New Zealand operates deep into the digital commerce market and set up online booking well before many of the big online agents. At times the airline has had an uneasy relationship with the traditional travel trade.
The carrier's chief revenue officer Cam Wallace says the death of travel agents had been predicted or that their businesss would rapidly decline.
"We haven't seen that. We've actually transacted more business in this last financial year with travel agents than we did in the previous year, even with all the competition around," Wallace says.
"We think it's still a very viable business model, they play a very important part in the travel industry distribution."
We've actually transacted more business in this last financial year with travel agents than we did in the previous year, even with all the competition around
Air New Zealand will continue to develop its digital arsenal, with new online tools for businesses and better targeting of passengers with offers, but it will also work proactively with the travel industry.
"We think the best way forward for both customers and airlines is to have more channels working and firing and the same time. It means we can stimulate the maximum amount of demand," he says.
There's an added incentive. Airlines usually make more money out of trips booked through agents.
"Ultimately we're competing against Qantas and Emirates and everyone else but we're also competing for [the] consumer discretionary dollar," Wallace says.
"Someone is making a conscious choice to buy a flat screen TV, go to a concert or go on a trip to Fiji. We think the travel industry plays a very material part in persuading more customers to choose travel," he says.
"The other thing is they serve a certain part of the market that wants personal service and advice and through them we can sell up through different channels - we tend to attract good value and yield out of travel industry partners."
Chris Wilkinson managing director of consultants First Retail Group says one way the traditional bricks and mortar players have battled the threat from OTAs is to merge and consolidate.
"Independents have disappeared - instead we're seeing groups of company-owned and franchised stores develop under recognised international and national brands," Wilkinson says.
On Monday Flight Centre bought into two local brands - Travel Managers, which supports more than 180 brokers and also operate a 22-shop franchise network and Executive Travel, the largest independent corporate travel management company in New Zealand.
The company's shares jumped to a 17-month high following that acquisition and it expanded further on Thursday in Canada, buying a Quebec City travel company which generates around $107 million a year in revenue.
Wilkinson says the big three agents had developed into distinctive brands and that each presented different propositions, with Flight Centre as price fighters, helloworld focused on being experienced global travellers sharing their knowledge, and House of Travel leveraging their local connections and community position.
The agents' focus has shifted toward holiday packages and long-haul trips where experience can make a measurable difference for consumers.
"With this type of spending, customers can't afford mistakes or bad decisions, which is where agents can add significant value," he says.
Travel was the first retail sector to transition successfully toward online and since then all the big travel agents had followed suit, adopting a blended model.
The resilience of bricks and mortar had initially been surprising, Wilkinson says.
"But when you understand the volume of major transactions these agents process and how their knowledge often unlocks deals people wouldn't find ordinarily online, it's clear the sector has carved a unique niche that's resilient to further impact digitally."
They were also sharing in a growing multi-billion dollar spend by New Zealanders.
"Leisure and business travel is growing exponentially, so there is continued scope in the sector. Some of the chains are seeing experienced business people from outside the sector buying franchises," he says.
Chief executive of the Travel Agents Association Andrew Olsen says falling airfares - at times available for prices seen in the early 1980s - hadn't helped agents.
Increased capacity and competition often means yield softens and this was noticeable over the last year in particular ridden out by agents who will live within their means in the leaner times
"Low fares and airline competition across the Asia-Pacific routes and what you get is a perfect storm for the traveller and a slightly bumpy ride for the agent," Olsen says.
During the past year some limited business class return fares to Europe have dropped below $3500 (on Cathay Pacific) and return flights between Auckland and New York (via Sydney on Qantas) sold for less than $900.
"Increased capacity and competition often means yield softens and this was noticeable over the last year in particular ridden out by agents who will live within their means in the leaner times."
Olsen said competition was "enormous" between the established brands and it was making travel agents acutely aware that customers have choice.
"Loyalty can be fleeting if you are not at the top of your game."
The number of workers in the sector fell steeply after the global financial crisis. About half of those in the area are non-customer facing, working in administration, support, technology, finance, marketing, organisation development and leadership and ownership roles.
Flight Centre, with the bulk of its operations in Australia, last year made revenue of more than $20 billion and its operation in this country cracked $1b. The company is on track to make an underlying profit before tax of between $325m and $330m for the 12 months to June 30 when it reports later this month.
Its New Zealand managing director, Dave Coombes, says in the New Zealand travel agency sector, 90 per cent of bookings still happen in physical stores.
"We're blending so we can deal with the customer where they want to. If you want to book online that's fine but if you want the support of bricks and mortar and real people when you need help a pure online model doesn't facilitate that support," Coombes says.
In his business consultants dealt with customers via phone, SMS messages, chat on the website and with individual URLs.
"They can book online and still deal with an individual travel consultant."
Coombes says that with more than 1.1 million New Zealanders taking holidays overseas, there were many first timers.
"Travel is a personal thing. People are nervous about booking a complex itinerary purely online and we're talking about the pie growing. People are travelling for the first time and they want assurance," he says.
Helloworld has about 60 branded stores in this country and 163 in My Travel Group, small independent agencies. There are about 1000 stores in Australia and the group has a turnover of about $3b in the two countries, says Simon Mckearney, the firm's executive general manager for New Zealand.
The company is about to launch its own branded flight booking site which would offer some Fly Buys rewards and Mckearney says helloworld is enthusiastic about the blended model.
"We embrace it. Think of us like a supermarket with a product and how you distribute it. You can have a big bricks and mortar store or online shopping - it's about getting the product into the hands of the consumer. Some people want to go into a store and have that discussion, some others don't."
House of Travel had a turnover of $1.7b last year and its founder Chris Paulsen said it was on track for revenue growth of 12 per cent this year. Its 71 retail stores are owned 50/50 with travel agents.
He says the firm's online booking system, Mix and Match set up in 2004, pre-dated OTA competitors and House of Travel continued to collaborate with the purely online competitors. The company was about to expand a model in New Zealand it had run in Australia where wholesale holiday packages are offered directly to consumers through call centres.
If we didn't disrupt our own business we're going to get disrupted anyway
This would provide competition for its own stores but they could only be open for limited hours whereas a call centre could run for extended hours seven days a week.
''If we didn't disrupt our own business we're going to get disrupted anyway. We want to be everywhere the customer wants to buy travel and we can't afford in a small market place like New Zealand to only operate in a retail environment," Paulsen says.
Agents all say the corporate market - where health and safety laws ensure employers have to provide a duty of care - offers big scope for growth. The VFR market (visiting friends and relatives) was also booming. Many new residents had a culture of dealing with agents in their home countries and continued this in New Zealand. They were also enthusiastic travellers.
There are also other ways of staying on the technology curve.
Flight Centre is developing a way potential customers can take a picture or a screen grab of any deal they see, send it to the agent and see if they can beat it.
Helloworld is investigating an app that could send deals to travellers near any landmark in the world and offer them deals in the vicinity.
"If you're walking past the London Eye you get a message on your phone saying here's a discount, charge it back to your holiday account with a travel agent. That technology is there and it's something we will move to," Mckearney says.
Bricks and mortar stores say they're on a solid ground here, however, a survey done for Priceline firm Kayak.co in Britain says they are in sharp decline.
The report found that 10 years ago, 57 per cent of adults booked their holidays through a high street travel agent but that had fallen to just 19 per cent.
We really believe in empowering individuals to make their own plans. Companies play to their strengths and we go after the more independent style of traveller
Online travel agents make their money through commissions on bookings, which are about 20 per cent for accommodation. This has seen the market capitalisation of OTAs, which own no accommodation, soar above hotel groups.
Priceline is the third largest e-commerce company in the world behind Amazon and Alibaba with a market capitalisation of US$97b, while Marriot International is on US$39b. Airbnb, now a competitor to older accommodation booking sites, has a market cap of US$31b and Expedia is at US$23b.
One New Zealand-founded online booking travel company - Online Republic - was last year sold to Webjet for $85m.
In the United States the American Hotel and Lodging Association has devised plans for a campaign saying online travel companies use unfair practices in their search businesses.
A proposed marketing campaign aims to portray online travel companies as monopolistic. Expedia has countered, saying travel is a competitive industry and that the company plays a small part.
A spokeswoman for Priceline told Bloomberg listing on the company's sites is optional, and millions of properties do so to increase their business.
In this country Booking.com employs 15 people at its Auckland office.
Luke Ashall, New Zealand area manager, says people who need more support go to a traditional agent.
Ashall won't confirm commission rates but says that it is part of the marketing cost that hotels, motels and other accommodation providers pay to have their properties on display to a global market.
Expedia has been operating around the world for more than 20 years and has a ''team'' of an unspecified size in New Zealand.
The company could not provide figures about the size of its market here, although a spokeswoman says in the past year there has been strong growth in its top markets of Fiji, Melbourne and Bali.
Inbound travellers to New Zealand booking through Expedia had increased almost 30 per cent year-on-year and the top international markets booking packages here were the US, Australia and Japan.
Mobile was crucial and nearly one in three of bookings globally were now made via mobile on Expedia sites. Five years ago, all customers were booking on desktop; now 40 per cent of consumers use more than one device to shop before making their final decision and booking.
''We are also seeing the introduction of artificial intelligence and bots to help us communicate and make researching, booking and travelling even easier and more convenient,'' she said.
The international travel market is valued at US$1.3 trillion globally, and Expedia was working with agents through a programme which allowed them to tap into its technology and inventory to service their customers.
The Great Escape
● During the past 40 years the number of NZers taking holidays overseas has grown five-fold to more than 1.1 million
● The proportion going to Australia and Britain has fallen relative to Asian countries
● Inbound tourism is driving increased airline capacity, meaning there are more cheap outbound flights for Kiwis
● The outlook is for more good airfare deals if oil prices don't rise sharply or competition wanes
● Any economic softening is unlikely to turn off the travel tap; overseas holidays are built into budgets
● Big traditional travel agents are growing through acquisitions and adopting more online services
● Online travel agents continue to grow, with more customers using mobiles to book