Alto survey shows high agency usage and industry growth

15, January, 2015

The results of the first ever ALTO Deloitte Language Travel Industry Survey shows growth among participating institutions and the fundamental importance of agents for recruitment in the language travel sector.

Average commission per student week is US$. Source - ALTO Deloitte Language Travel Industry Survey, Agents' survey

The Association of Language Travel Organisations (ALTO) commissioned Deloitte, through its Maltese office, to create an annual benchmarking report on business trends in the industry, looking at both the language school and agency sides of the sector.

The school survey – completed by 108 participants representing a total of 304 school centres worldwide and combined net revenue of US$507.8 million – found that agents were responsible for 85 per cent of bookings. This ranged from 93 per cent for Ireland’s English langauge schools to 72 per cent for participating schools from the USA.

For schools, the junior market represented 16 per cent of student weeks but 25 per cent of gross revenue and 27 per cent of net revenue for the 83 participants that provided complete data for these questions.

“This is explained by the fact that junior revenue per week tends to be higher and also that junior business tends to include a more significant element of non-tuition items which tend to carry a lower commission,” said the report.

For the 64 participants in the agency survey – representing 127 branch offices and US$168.4 million in combined revenue – the junior segment constituted 35 per cent of students weeks, but 29 per cent of commission revenue.

The survey indicated stronger growth in the adult sector for schools in 2014, with an average increase of 16 per cent in adult student weeks for the participants, compared with a nine per cent rise in junior student weeks. Schools in Australia registered the highest average growth in overall student weeks at 24 per cent, followed by schools in the USA, Canada and South Africa (all 16 per cent).

Performance in the junior market was more mixed; while 30 per cent of schools recorded an increase in junior student weeks in 2014, almost half saw no change and 23 per cent suffered a decline.

Overall, Brazil was the largest source market for the participating schools, based on student weeks, followed by Korea and Italy. Economic issues in source countries was the biggest perceived negative impact on business – cited by 80 per cent of schools – followed by ‘my country’s government policies’ (72 per cent).

The agency survey compared average commission per student week for the four countries with five or more participants and found Russia had the highest at US$122 per week, followed by Spain (US$82), Germany (US$69) and Brazil (US$65). The average commission among participating agents in all other countries was US$139 per student week.

Growth in 2014 was more mixed from the agency perspective, with an average of 4.8 per cent growth in adult student weeks among the reporting agencies and a 2.5 per cent decline in junior student weeks.

Agents in Russia recorded a 21 per cent decline in student weeks. As previously reported in Study Travel Magazine, Russian agents have suffered from a falling rouble and the country’s diplomatic stand-off with the West.

Indeed, all Russian agents that completed the survey cited currency exchange as negatively impacting on business, and this was the most common negative factor overall, referenced by 81 per cent of agents, followed by ‘economic issues in my country’ (78 per cent).

The report also examined how many students take up accommodation with schools, with 79 per cent of students doing so. The take-up rate was significantly lower in the UK (43 per cent) and Australia (50 per cent). As recently reported, the UK in particular is perceived as having a much more mature private housing market for international students.

The foreword to the report states, “We would like to emphasise that this is the first one in a series of benchmarking reports and although the data is representative of the industry, we expect to publish more accurate data in the future with higher response rate as awareness of the survey grows.” The executive summary of the report is available to non-Alto members.

Detailed data from Study Travel Magazine’s surveys of full-year trends in the major language study destinations can be found here, while each month STM presents an in-depth survey of an agent market, with Italy featured in the present issue.

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