Surf’s up
Surf’s up
Travel agencies say the new tourism law may prompt holidaymakers to surf their Web pages, but fear customers will book packages directly with competing tour operators.
The domestic tourism sector could be in for a major shake-up with travel agencies now required by law to specify which operator is behind the tours that the agencies are offering online. Agencies fear that people will simply surf their Web pages for bargains and, given the Czech propensity to carry out transactions in person, cut them out by heading directly to the tour operators’ offices.
“[We believe] this new law harms the travel agencies and was probably drafted on the orders of a [powerful] group of tour operators,” said Michal Tůma, the marketing manager of Invia.cz, the sixth-largest Czech travel agency in terms of customer volume. “We don’t have any estimation of possible losses yet … [but now] clients can search our database of 260 tour operators and then buy directly from the one they like without going through us.”
“The new law poses risks for online travel agencies, while it puts the tour operators in a beneficiary position,” said Jan Staněk, the manager of Net Travel.cz, an online travel agency that offers trips from over 60 tour operators active here. Tour operators reject the charge that the new requirements give them any unfair advantage, arguing that quality of services is the main issue.
“I don’t think travel agencies will lose clients; it depends only on them what kind of services they will offer to their clients,” said Dan Plovajko, spokesman for Cestovní kancelář Fischer, the third-largest Czech tour operator in terms of number of customers, which he said had 145,000 customers in 2005. “This [new law] is a correct approach because clients have the right to know, before signing a contract, with whom they will travel,” Plovajko said.
The number of vacation trips sold via the Internet in the Czech Republic has increased 100 percent every year along with the increased penetration of computers and related technologies.
Analysts say price isn’t a key issue, as long as both Invia.cz and Net Travel.cz, for example, sell tours at the same price as the organizer – as is the case with most travel agencies, which typically receive an 8–10 percent commission for each sale. The agencies’ advantage over tour operators is the diversity of offerings in their portfolio, as they gather tours from many tour operators and cover a wider customer demand.
Marek Jahůdka, head of the tourism section at the Ministry for Regional Development (MMR), said that the new law is in line with those of other European Union countries, where it’s customary that both tour operators and travel agencies are identified in any offer, allowing consumers to make a well-informed decision.
Proponents of the amended law also argue that it will increase customer safety. In addition to comparing basic information about travel itineraries and prices, would-be clients can see straight away which operator is organizing the trip – and readily find out if the tour operator is insured. Among other provisions, the amended law establishes rules for package tour organizers, who must be insured if they want to offer any combination of two or more traveling products with an itinerary of more than 24 hours.
Some sector analysts say that travel agencies’ objections to the new law could be fueled by the cutthroat competition on their market. According to the Trade Register of the Ministry of Industry and Trade (MPO), there are 772 tour operators and 6,911 travel agencies operating in the Czech Republic, or roughly one agency for every 1,475 Czechs. By comparison, in neighboring Germany – the largest European tourism market in terms of overnight trips, according to the EU statistics office Eurostat – there are 1,500 tour operators and 12,600 travel agencies, or one travel agency per 6,500 inhabitants.
This means that the number of travel agencies per capita in the Czech Republic is nearly five times higher than in Germany, and even higher yet compared to other countries with a long tradition in tourism, such as France, Spain or the United Kingdom (see table).
Although too early to say what will be the effect of the new law, Net Travel.cz’s Staněk said that even if some clients might use the Web site only as an information source, they don’t expect huge losses. “We believe the migration rate [from the page of the travel agency to the page of the tour operator] won’t exceed 10 percent [and may be much] less,” he said. “Travel agencies are starting to give some added value to customers in order to keep them.”
Invia.cz’s Tůma also stressed what he said is his agency’s competitive advantage over operators. “We have the knowledge of an entire destination, not only of a few hotels, as is [often] the case with a tour operator.” Svatopluk Rada, the director for incoming tourists with Čedok, the largest tour operator on the Czech market, said the law will have “a greater impact on travel agencies than on us because we already apply the principles it brings.” Čedok had 426,000 customers in 2005, according to a tourism agency Mag Consulting survey from March 2006.
Rada added that other EU countries have similar requirements and a major “migration” of business from agencies to operators didn’t happen. In fact, he said the new law might even hurt some tour operators.
“Clients might have had bad experiences with some tour operators and will change their mind when they see who organizes the trip,” Rada said, adding that this was more likely to happen with small or inexperienced tour operators.
The Association of Tour Operators and Travel Agencies of the Czech Republic (AČCKA) has also identified a certain hazard for travel agents.
“There’s a risk [of losing clients] especially for travel agencies focused only on Internet sales and located in major cities,” said Tomio Okamura, the AČCKA board member responsible for communication. “[In a large city] there’s no problem for a client to search for a trip on the Internet and then go to a concrete, physical tour operator office, get advice and pay for the trip on the spot,” he said.
Okamura said that the risk is fueled by Czech tourists’ reluctance to buy expensive trips online, as most feel more confident they’ll get what they’ve paid for if the transaction is done personally.
Travel agencies are aware of this preference; Invia.cz, for example, has opened two offices in Prague and has one in Ostrava, North Moravia, as well as in Brno, South Moravia; they also have one in the Slovak capital, Bratislava.
“The reason for opening physical branches was to be closer to clients who need to see us,” Tůma said, adding that most clients simply want to pick up documents, sign a contract or pay in cash for trips they’ve reserved online.
“We acknowledge the risks for the travel agencies and tour operators, but we must think of the advantages for the customers first,” MMR\'s Jahůdka said. He noted that even before the new law took effect the client would still learn the name of the tour operator before signing a final contract. “For customers willing to buy via the Internet it will become easier to orient themselves and save time,” Jahůdka said.
According to figures provided by AČCKA, the sale of travel services online here has nearly doubled every year since 2003. Last year, approximately two million Czech tourists traveled abroad and used the services of a travel agent, spending roughly Kč 2.8 billion (about € 98.4 million) – or Kč 1,400 per person, including children. In 2005, 5.5 percent of all trips were sold via the Web.
“We estimate that 10 percent of all trips in the Czech Republic this year will be sold through Internet,” AČCKA’s Okamura said, adding that by 2009 one third of all the trips may be sold over the Internet.
Cestovní kancelář Fischer belongs to the Karel Komárek group of companies, which includes Stanford, the publisher of this newspaper. By: Cristina Muntean,Czech Business weekly
Publikováno: 07.08.2006
