Travel agencies struggling

A glossary of words as well as an exercise related to this article are also published online.

A glossary of words as well as an exercise related to this article are also published online.

FOUR travel agencies went bankrupt this year, stranding more than a 1,000 customers in foreign countries. Conflict in the Arab World, a saturated market and continued slow economic growth were among the leading causes of collapse, as experts suggest that a “purification” of the market may be underway.

The first travel agency to go belly up this year was Tip Tour, which closed in May after 23 years on the Slovak market. The second was A-Tour, which went out of business on July 29, with 88 clients in Bulgaria. A-Tour’s insurance company Allianz provided transport for tourists from Bulgaria via bus. One month later, Best Choice went bankrupt, reasoning that political problems in many of the destinations it offered led to a drop in demand. At the time, Best Choice had 149 customers abroad threatened with being kicked out of their hotels.

“I will not forget this tour to Tunis so easily,” Emília Švecová, a Best Choice client from Bratislava, told the Hospodárske Noviny economic daily on August 6. After having her money and mobile phone stolen, she encountered a protest involving explosions and numerous police officers carrying machine guns.

“Finally, they wanted to kick us out of the hotel at 13:30 and leave us outside on the street because our travel agency did not pay,” Švecová said.

Most recently, Medina Tours closed its doors on August 17 with some 850 customers abroad, who were able to finish their holidays without complications. Medina cited the bankruptcy of its mother company, according to Hospodárske Noviny. During the last 11 years, 12 travel agencies disappeared, according to The General Secretary of Slovak Association of Travel Agents (SACKA) Ivan Schwarz, who added that usually smaller travel agencies tended to go bankrupt, the Pravda daily reported.

“This is the first season in history when we noticed the bankruptcy of so many travel agencies,” Schwarz told Pravda.

Purifying the market

The main reason for this series of bankruptcies is that too many agencies offer similar products, Róbert Žember, the coordinator at Hechter Travel Agency, told The Slovak Spectator.

Jana Zedníková, the manager of Satur Company, agreed, saying there are too many players for such a small market.

“Mainly the strong travel agencies will survive,” she told Hospodárske Noviny.

Agencies with sufficient financial reserves and those which did not focus on North African countries did not suffer from the crisis so much, the director of Europäische Reiseversicherung AG Slovakia insurance company, Miloš Kmety, told The Slovak Spectator.

“I would rather call it the purification process [of the market] expelling weaker subjects,” Kmety said. “Please notice that during this period some agencies have grown and increased their market share.”

Despite experiences with bankrupted travel agencies in Slovakia in recent years, it is impossible to recognise agencies with financial problems. In the past, there were some indications, for instance, if an agency’s employees did not communicate with customers, or if people did not receive services they were promised. However, no such thing occurred in the bankruptcies this year, Ivan Šidla, the spokesperson for Invia online travel agency, told the Nový Čas daily.

“I do not know any simple recipe”for recognising a travel agency in trouble, Kmety said. “I am afraid that even insurance companies do not have enough information to predict how the season will evolve and [presume] the economic result of travel agencies with sufficient accuracy.”

Travel agencies that went bankrupt carried on with normal business to the last moment, Kmety said, only particular suppliers, such as hotel companies or airline holding companies, could see signs of problems in the form of delayed payments.

If the worst happens...

With less cash on hand, smaller travel agencies are more sensitive to economic turbulence, but this does not mean that they are prone to bankruptcy, Kmety said. Usually they have a small number of employees and offices, so fixed expenses are lower in comparison to bigger agencies. Still, generally speaking, bigger travel agencies with more than 10,000 customers which offer destinations in many foreign countries should be a safer bet, he said.

Šidla argues that the size of the agency is not the main issue.

“It is very suspicious when, in some cases, the price is obviously inadequately low and, personally, I would use common sense and evaluate the situation as suspicious,” Šidla told Nový Čas.

Clients should check the amount of insurance on a given holiday package and verify it at the relevant insurance company, Žember added. He agreed that people should not focus just on price but rather evaluate the price to performance ratio of the trip and the background of the travel agency.
“Today, normal travel agencies communicate with clients even via various social networks and if a client sees some censorship or reluctance to provide an explanation, this fact may also make a difference [between travel agencies],” Žember said.

After realising that a travel agency has gone bankrupt, customers should remain calm and contact the related insurance company, according to Žember. Kmety agrees, adding that a good insurance company will inform its clients about the bankruptcy of their agency.

“The main goal of every insurance company must be a satisfied client,” Kmety said. “Thus, the first information about the collapse of a travel agency must come to the client at the initiative of the insurance company, which must also inform [the client] on what to do next.”

Croatia is top vacation destination

ABOUT one in four Slovaks travel on holiday without ever using the services of travel agencies. In general, there were 582,024 outbound departures of Slovak citizens who travelled abroad on holiday using a travel agency in 2012, while the number of days spent in foreign countries totalled 4,775,844, with the average length of stay being 8.2 days.

Some 36 percent of Slovaks use travel agencies regularly and 38 percent use them occasionally, according to an internet survey of 1,500 people conducted by the NMS Market Research agency and Heureka.sk, the SITA newswire reported on September 12.

Cars are the favourite means of transport for people travelling without an agency, with 73 percent opting to drive, 17 percent preferring planes, 6 percent using buses and 4 percent trains.

The most popular destination in 2012 was Croatia, since 116,784 trips were made there. Turkey was the number two destination, accounting for 90,295 travels. Bulgaria ranked third with 56,790 trips. More than half of the trips (384,927) abroad in 2012 were from the Bratislava Region, according to the Slovak Statistics Office (ŠÚ).

Slovaks spent more than €1.3 billion on travelling, averaging €708 for each trip. On shorter trips Slovaks spent a total of €107,689, with each one averaging €262, according to ŠÚ.

A lack of finances was the reason 50 percent of Slovaks did not take a holiday in 2012. Meanwhile, 21 percent did not travel due to personal reasons and 11 percent preferred to stay at home with family and friends. Just 5 percent of Slovaks did not go on holiday because of work and 6 percent cited a lack of time, according to a European Commission report published in March 2013.

This article is published as part of Spectator College, a programme created by The Slovak Spectator with the support of Union poisťovňa.

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