Steady rise in online vacation sales

Steady rise in online vacation sales

The year 2006 was another record 12 months for travel agencies. Internet travel agency Invia.cz estimates that up to 2 million people went on a foreign trip using the services of a travel agency.

The previous highest number was recorded in 2005 when, according to statistics, almost 1.8 million people ventured out on a package vacation. The latest figure, therefore, represents year-on-year growth of 11 percent.

The evident and growing taste for traveling among Czech people primarily results from the increasing income of Czech households, the strengthening of the crown against foreign currencies and decreasing package vacation prices. The price decreases are most apparent in terms of exotic vacations that have become up to 50 percent cheaper, especially thanks to the introduction of direct charter flights to some exotic destinations. By virtue of this development, some travel agency clients are even prepared to depart for vacations abroad several times a year.

The size of the market in financial terms stayed the same in 2006 as compared to 2005, at around Kč 13 billion (€ 468 million).

Internet sales up steadily

The sale level of package vacations via the Internet, which this year will amount to a total volume of Kč 2 billion, has registered a marked increase. This sales method accounts for a 15 percent share of the overall volume of sold foreign vacations.

In 2005, some Kč 1.2 billion was spent on vacations abroad booked through the Internet, which was then equivalent to 10 percent of the total spending on vacations beyond the borders of the Czech Republic. In 2007, we expect this figure to rise to Kč 2.8 billion and be equivalent to 20 percent.

It was only in 2002 that vacations sales via the Internet began in the Czech Republic. Currently, however, in comparison to other Central European countries, the proportion of sales achieved in this manner is among the most significant of the reported rates. Until 2010, we expect online sales to rise to a 35 percent share of the market. This would put the Czech Republic on par with the rates of the developed countries of the European Union. After that, the pace of growth in this area is expected to slow down by a fair degree, and will only reflect the increase in the number of Internet users.

Changes in what people want

The last several years have seen some trends developing in the vacation sector. Beach vacations are no longer only booked in the summer months. Although people still tend to prefer the months of July and August for their beach vacations, the trade segment share of these two most popular months, as compared to the share of the other months of the year, has declined significantly to a mere 55 percent recorded for this year. In this respect, the main season has lost its statistical spike, something that’s good news for the travel industry.

The reason for this development is the decline of out-of-season prices and the agreeable summer-like temperatures and climates of popular nearby destinations such as Egypt, Tunisia and Turkey. Furthermore, there’s increasing interest among Czechs toward exotic vacations in more distant locales such as the Caribbean and Southeast Asia.

Czechs are also raising the level of what they expect to experience on a package vacation. The demand for air travel tours to destinations with all-inclusive higher category luxury hotels is increasing and is set to continue on the upward curve. One cause of this trend is the improving purchasing power of the Czechs.

New hot spots

While there hasn’t been a change in the most popular destinations, some other countries are starting to register an increase in demand. Statistical data provided by travel agency Invia.cz shows that during the summer season the demand for vacations in Greece, Croatia, Tunisia, Italy, Bulgaria and Egypt was the highest. In the winter season there was a greater demand for Egypt, Austria, Italy, France, the Canary Islands and Tunisia.

The most sought-after exotic countries were the United Arab Emirates, Thailand, the Dominican Republic, Cuba and the Maldives.

In 2006, the Cape Verde Islands, Jamaica and India were new countries that could be added to the list of popular vacation destinations. There’s also a growing interest in introductory tours to Africa, particularly for expeditions and safaris in national parks.

Legal changes

As of August 2006, the new Tourist Industry Act took effect. Among other things, it stipulates the obligations connected to operating a travel agency. Prior to the act, regulations governing this were more or less absent from the law.

Since Aug. 1, the new legal situation has meant that sales of services by travel agencies are subject to limitations. Up until then, all travel agencies were permitted to sell a combination of services such as meals and boarding, accommodation and transport that were compiled in such a way as to cater to the individual needs of the client. The changes mean these services can now only be provided by insured tour operators.

Also according to the new law, a travel agency must always clearly state the name of the tour operator that is actually organizing the trip. In many cases the travel agency acts as a reseller for a tour operator’s services. In the opinion of some experts, this disclosure could lead to a downturn in the sales of travel agencies. Concerns have been raised that clients may possibly choose the desired vacation from a selection presented by a given travel agency, but that they will subsequently buy the vacation directly from the tour operator that has physically arranged it.

Invia.cz views this amendment as an instrument that, under the pretext of offering better protection for the client, actually forces travel agencies to provide free advertising for other travel entities. Marek Stavinoha, co-owner of Invia.cz, said that the law was pushed through by big tour operators that fear the growing market share held by those who are selling vacations through the Internet. “As these Internet agencies are selling the services of a large number of different tour operators, they make it possible to compare their offers in one single place. The misgivings of some tour operators probably stem from the fact that small travel agencies are offering the same package tours up to 30 percent cheaper than large tour operators,” Stavinoha said.

Michal Tůma is marketing executive of travel agency Invia.cz.

Czech Business weekly

Publikováno: 22.01.2007