Hong Kong, Singapore travel agencies adopt asset-light model, tie up with logistics providers to survive pandemic

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Agencies are adapting different strategies to ensure they can keep doing the same amount of work with fewer resources while waiting for business to pick up

Travel intermediaries saw a 46 per cent fall in global sales in 2020 compared to an annual growth rate of 5 per cent in the prior five-year period: Euromonitor

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Hong Kong’s travel firms have been disproportionately affected by the coronavirus pandemic. Photo: Felix Wong

Cheryl Heng

Published: 2:20pm, 22 Feb 2021Updated: 2:20pm, 22 Feb 2021

The Covid-19 pandemic has forced travel agencies in Asia to revamp their business models with many pivoting to asset-light models and maintaining a more flexible workforce. Others are seeking new opportunities by partnering with thriving sectors such as logistics providers to tide through the crisis.

The slump in travel demand has made travel agencies question the old ways of doing business and their sustainability, as the future of travel is set to be different than before, said Rabia Yasmeen, consultant at market research provider Euromonitor International.

“Traditional tour operators that rely on offline sales and physical presence are now thinking of moving online,” said Yasmeen. Online travel agencies and holiday-booking platforms that were previously investing heavily in search engine optimisation and advertisements are also seeking to reduce costs and overheads, she added.

Travel intermediaries like tour operators and travel agencies have borne the full brunt of the pandemic, with a 46 per cent fall in global sales last year compared to an annual growth rate of 5 per cent in the prior five-year period, according to Euromonitor data. Those in Hong Kong saw a 68 per cent decline while their Singaporean counterparts suffered a 59 per cent drop.

The usually busy Peak Tram wears an empty look amid a lack of tourists. Photo: Sun Yeung

In Hong Kong, tourist arrivals plunged nearly 94 per cent year on year in 2020 to just 3.57 million, a 36-year low, according to data from the Hong Kong Tourism Board.

Agencies are thinking how to be operationally lean, to ensure that they can continue doing the same amount of work with fewer resources while waiting for business to pick up, said Steven Ler, president of the National Association of Travel Agents Singapore, or Natas.