Jiří Jelínek interview for Euro weekly

There is one thing that makes the Fischer Travel Agency's boss Jiří Jelínek stand out at first sight. His age. Not that 42 years is somehow uncommon for a top-level executive, but the fact that he's been at the helm of one of the largest Czech travel agencies for the past 11 years is. He joined the firm at a time when former owner Václav Fischer ran out of money. The debts were repaid by current owner Karel Komárek who brought Jelínek from the management of the Russian branch of the vendor of consumer electronics Thomson. The brand has since disappeared, but when it was managed by Jelínek, Thompson was the number one on the Czech market. The travel business, in contrast, is doing much better even though it faces major security risks.

This year's season has been marked by a number of events that have negatively affected the tourism sector – the Greek crisis, the attack in Tunisia, and other incidents. What is your view of this year?

On the whole, the market has dropped by some five percent. Tunisia played a part in this and so did Greece at the beginning. But in the end, Greece didn't do that bad. The only security problem was the incident in Tunisia, and there are some issues in Egypt as well, which continue to exist.

The shape of the entire business sector, however, is also affected by what's called shared economy. How is the market coping with such phenomena as private accommodation booked through Airbnb?

Right now, I'm in the process of preparing a presentation that will show that the size of the European travel market is approximately 480 billion euros. From that amount, travel agencies account for about 120 billion, and airline tickets and hotel accommodation make up the rest. If you look at the trend of bookings made by individual travelers, you can see a strong rise in the business of online agents, such as Booking.com and Expedia. At this time, the market share of Airbnb is very small. But online agents are much bigger and play much more important a role.

Travel agencies are not affected at all?

No, on the contrary. The market share of travel agencies has actually been growing in recent years. Their business has shifted from selling trips from one place to another toward buying exclusive capacities in every European country. The trend is clear. Running a travel agency is a relatively risky business in terms of margins. Because of that, travel agencies try to do business directly at destinations. That's often more profitable and less risky than the operation of a standard travel agency.

How big is the threat that the competition will further grow or that someone new will come to the market?

Airline companies will more and more make their way to the market. It's already happening in America. First you buy and airline ticket and only then you book a hotel. In Europe, you can see that Air Berlin Holiday and Lufthansa Holiday are following suit. A similar concept is being launched by easyJet. They are able to optimize their available capacity. It's always a question of who can create a product and who decides how it will be sold. Whether it's a hotel owner who creates the product and provides the capacity to a travel agency, or whether it's owned by a travel agency that only sells it to itself. And doesn't provide the product to anyone else. The key factor is having appropriate capacity, especially for families with children.

That's how it works from the viewpoint of the market; what does it look like from Fischer's viewpoint?

We grew in the summer by over 24% and 25% as far as revenues and the number of travelers, respectively. That's mainly thanks to the products we provide. Families with children are the core of our business. We have a very broad portfolio of destinations. When the problem in Tunisia happened, we were able to send our clients somewhere else immediately. Mallorca was very much in demand, although it is somewhat pricier. But people were buying trips there because they considered security an important factor. Turkey was selling very well too, as were all the Greek islands. That even includes Kos despite the fact that the media were portraying it in quite a bad light.

Does the market show a certain shift from the Mediterranean toward holidays in exotic destinations? Purchasing power is growing after all.

As far as exotic vacation packages, our business has grown by 50%. We've had more than 16,000 clients. This year was the first time when we structured the season differently. We offered vacation packages only with travel by standard airline flights. We've abandoned charter flights because the Czech Republic doesn't have suitable airplanes for this concept.

There still aren't any suitable airplanes in the Czech Republic. Where do you get them from?

We have partnerships with all the major airlines. We are able to prepare packages for the number of nights requested by clients. One of the disadvantages of charter flights is that they don't allow variable length of stay. But you won't find exotic charters in Austria either, despite the fact that purchasing power is higher there. They organize vacations in exotic destinations the same way as we do. The Czech market will eventually get there as well.

But they have Austrian Airlines of course …

Yes, but Prague is serviced by Lufthansa, British Airways, and Emirates. Austrians have their national airline, but it doesn't mean that tourists who go to Caribbean islands aren't traveling with someone else. It's a question of philosophy, where effort is made to ensure that customers don't get overly tired and don't have to spend too much time in recuperating from the flight. And, as I said, charters are very limiting as far as flight schedules are concerned. A plane that goes to the Caribbean for 10 or 11 nights flies only three times a month. That's a terribly low figure because clients want to fly whenever they feel like going. Perhaps for 14, 16, or nine days. We are able to offer that flexibility. Everybody can choose whatever airline they want, and it works.

How did you respond to the change in Travel Service's policy and the fact that they began selling refreshments? Have you considered using standard flights also for travel to the Mediterranean?

The things that have happened in relation to catering were negative mainly in how they were communicated. If a decision to that effect is made, customers should know in advance. A decision can't be made on the last day of June when the season is fully under way and thousands of people fly every day. People don't expect such a change. I understand the change from the financial viewpoint. If you look at most airlines in this segment, their catering options are very limited. They offer water and maybe a sandwich on short-distance flights. The things formerly offered by Travel Service – for example, passengers could get unlimited amounts of alcohol – don't exist anymore. Travel Service was a major exception. In a way, the options were extremely generous.

How do you determine security in particular destinations?

We monitor statements issued by British authorities and ministries. Their recommendations are usually very responsible and realistic in view of the situation in specific destinations.

You don't trust Czech authorities?

British authorities update their recommendations on a daily basis; their Czech counterparts are relatively slow.

Do you see any new destinations that will replace those where the security risk has increased?

For instance, we've begun to offer vacation packages in Oman. That's an alternative particularly for people who have visited the neighboring United Arab Emirates on a few occasions. Oman is a very secure destination, and when you visit one of its white beaches, you feel like in the Caribbean.

Your own the Privileq brand, which provides exclusive custom-made holiday packages. How is Privileq doing?

We're happy about how the brand is performing. In the course of the year, we've sold vacations to some 200 clients at the average cost of 100,000 crowns. As far as these packages are concerned, it doesn't matter whether you're flying to a faraway place or only travel to a place like Italy. The important thing is what you want to see, where you stay overnight, and what you experience.

What's the maximum amount a client is willing to spend?

Some packages are worth as much as one or two million crowns. The maximum price for a trip was close to four million crowns.

I always tell my wife to disregard Czech ratings when choosing a holiday package because Czechs are not very demanding. Would you agree with that? Do Czechs settle for less?

On the contrary, we think that they are in fact more demanding. Things are changing. And it depends a lot on a person's language proficiency. Englishmen or Germans are able to communicate with the local people at destinations, and they don't find it strange that a guide doesn't wait for them upon arrival. They don't need one because they know languages and worse comes to worst, they take a cab or rent a car. Their travel style is much more individualistic. Tourists from the UK or Germany are not concerned with who will pick them up; they aren't worried about getting lost. In contrast, Czechs have certain expectations about their vacations and might at times be more demanding than Germans.

You mean that they expect more assistance at the destination, while the quality of services might not play such a role. It would appear like that …

The question is what you can get for what money. You can't expect that you'd get luxury and fantastic all-inclusive meals if you pay ten thousand crowns. That doesn't work financially.

How are you doing this year finance-wise?

We expect that revenues will reach the four billion mark and that we will have some 300,000 customers. That translates into significant growth because last year, we took in 3.27 billion. Last year, EBITDA amounted to 118 million. This year, we are expecting approximately 140 million crowns.

I can see that the CNB's policies haven't had major impact on your business …

Our results would be much better if the currency-exchange situation were more favorable. Exchange rates play a huge role in the purchasing of hotel accommodation and air travel capacities. But we live in a certain economic setting and in a certain environment, and we have to be able to cope with that. Some do better, some worse.