“Prices have skyrocketed and no matter what period we would have referred to, Poles have never seen such holiday prices”, says Piotr Henicz, vice president of Itaka and deputy head of the Polish Chamber of Tourism in an interview. He lists three main reasons for the drastic increase in the prices of foreign trips. Inflation in Poland is not one of them. He also warns that “if the regulations do not change, tour operators will not be able to operate in the country in the near future”.
Interviewer: Will it be the most expensive holiday in history?
Piotr Henicz, vice-president of Itaka, vice-president of the Polish Chamber of Tourism: Undoubtedly, yes. The prices have skyrocketed and no matter what period we have referred to, Poles have never seen such holiday prices.
What are we seeing now?
Is there any definitive limit to these increases?
I believe that the increases should stop at a maximum of 30%. This is the limit that consumers are able to accept. If they are higher, the market simply cannot handle it.
Why are we dealing with such a sharp rise in holiday prices?
The biggest problem is the price of aviation fuel. In January, a ton of fuel cost around $ 770, now it is over $ 1,220 – that’s nearly 60%. increase. If it does not stop or decrease, it will only be more expensive. The share of the fuel price in a vacation with a charter flight is significant. Take, for example, the most popular destinations among Poles – Greece and Turkey, where a one-way flight takes about three hours. The price of this flight is 30-40 percent. the cost of the entire vacation.
The second extremely important element here is the low exchange rate of the zloty. In January, the dollar cost PLN 4, now PLN 4.48. And so we have another 10 percent. an increase in the departure price on the currency itself.
The third problematic issue we have to deal with this year is CO2 emission rights. Rising costs mean that you have to add a few percent to the final price again.
High holiday prices “cheap last minute is history”
You do not mention inflation in Poland.
It also has some influence, but let’s not forget that inflation is present in most of the countries where Poles go on vacation. Recently I talked to a hotelier from Turkey who told me that in December he was paying 50 cents for a kilo of apples. At the moment, it is 4 euro (inflation in Turkey is currently about 70% – ed.).
It is true that we pay for a large part of the hotels in advance, but there are also places that we “order” as a supplementary offer, such as about last minute offers. They used to be super attractive, now they are more expensive than the standard ones. Cheap last minute deals are history.
So how many less Poles will go on vacation this year?
Compared to last year, which was weak, because of covid, we have recorded a clear increase. At the moment, it is approx. 50-60 percent.
But if we look at 2019, which is normal, before the coronavirus pandemic, and compare the sales of summer bookings, the situation is quite different – unfortunately, much worse. Here we have a decrease of about 20 percent. All because for the first two months of this year we still had a pandemic, and on February 24, the war broke out in Ukraine. However, we are slowly making up for these losses.
There is a chance to at least catch up with the result from 2019?
It is impossible to make up for the lost months. However, due to the higher price level, our turnover will be closer to that of 2019.
A painful time for travel agencies
What else hurts travel agencies?
We are clearly not helped by the insecurity that came with the pandemic. And a sense of security should accompany us when travelling, it is an extremely important issue. We go on vacation to rest, not to think if everything will be alright, whether they will let us in some place, or whether there will be a war.
As part of the promotion, during the pre-sale period, we offered customers the option to cancel their holidays at a much lower price, often almost for free. This step, however, makes it difficult for us to plan and run a predictable business , because we have no guarantee how many tourists will ultimately come with us.
Have you taken any more steps to adapt to the situation and make it easier to get through this difficult time?
If we were not after two years of a pandemic, we would probably consider buying large amounts of fuel and currencies in advance. This process took place in previous years. At the moment, hardly anyone could afford it.
But most of all , it was difficult to predict what had happened, as no one was talking about inflation six months ago, at least on such a scale. In our industry, exchange rates and fuel prices are monitored every day and – believe me – there were no forecasts that would indicate any extraordinary action. We are dealing with something that no one, or few, has cared for.
“If the regulations do not change, tour operators will not be able to operate”
Tour operators want government help?
Yes, we are talking about it. It is primarily about changing the act, which regulates the rules for receiving tour operator guarantees, and which is nowhere near to reality.
I already explain what the problem is: the tourist industry during the pandemic was perceived by banks as a high-risk sector, and the war in Ukraine and rampant inflation made financial institutions even less trust in us. Therefore, it is more and more difficult for tour operators to fulfil their statutory obligations, i.e. obtain tour operator guarantees.
The tour operator guarantee is primarily intended to protect customers. Let me remind you that there is also the second pillar, i.e. the Tourist Guarantee Fund, and the third – the Tourist Aid Fund. Therefore, we have a security system in Poland like nowhere else in Europe.
Therefore, we expect such legal regulations and procedures so that financially stable tour operators can obtain such a guarantee without any problems. Currently, regulations make it either difficult or even unrealistic.
Currently, the tour operator obtains a guarantee in relation to the turnover from the previous season. A few years ago, the security was 10-15 percent. the value of the guarantee. At the moment, reinsurance companies demand collateral at the level of 100-120 percent. the value of the guarantee. This problem affects every travel agency – both small and large.
If these regulations do not change, tour operators will not be able to operate in Poland in the near future. Therefore, we expect very quick help from the government here.
The situation is very uncertain. Only at the end of the season it will become clear at what profitability level we have been running our business and whether we will be able to make a profit at all . It is totally unpredictable at the moment. I would also like to point out that tour operators do not work at a profitability of 10 or 15 percent, but at a profitability of 2 or 4 percent. and this is a great result.
And what has the new reality in which we found ourselves changed among the tourists themselves?
During the pandemic, no fashion played a role, but restrictions. Hence, the popularity of Zanzibar, Dominican Republic and Albania suddenly appeared. Now we are slowly returning to the time before the pandemic – Turkey, Egypt and Greece are again the most popular. Next comes Spain and Bulgaria.
We notice one more thing: customers who bought a very cheap holiday in the past years are now completely abandoning the trip. Those who cannot afford are simply not going. On the other hand, those who can afford it have not changed their habits – they do not choose cheaper hotels, do not shorten their holidays, even though their trips are much more expensive.
Which countries have prices increased the most?
To those that are farthest. The longer the flight, the greater the increase. If someone wants to go on vacation relatively cheap, let him look for a vacation as close as possible.
Everyone is looking for unnecessary costs wherever possible. Are you considering resigning from residents, what has the competition, i.e. TUI Poland, done?
In destinations served by charter parties, i.e. where the greatest tourist traffic is concentrated, we provide full care for our residents. The pandemic has caused tourists to expect just that from travel agencies. This was shown by the number of people who reported to our employees at airports asking for help, for example, in filling in the documents. I’m talking about this season. We’ll see what will happen next.
On the other hand, the number of customers interested in individual travels is growing, with a flexible option to choose the date and place of departure or the length of stay as part of dynamic packaging. It is for their needs that we have introduced a new service: ITAKA Travel Experts – a 24/7 hotline.
Over the phone, the comfort of their travels is supervised not only by Ithaca representatives at the headquarters, but also by our local representatives in every destination, who are ready to help in emergencies. Customers can contact a Polish-speaking guardian not only by calling a non-stop telephone number, but also by popular instant messaging or by e-mail. All the most important information about your stay is always available at hand in the mobile application.
Let’s look for some positives. Do tourists have any reasons to be satisfied this year?
They can finally go on holidays abroad and are not hampered by covid restrictions. We can see that despite high inflation and the war in Ukraine, Poles need holidays. Many of them want to invest in rest instead of another renovation, which was common during the pandemic.