FULL EDITING MODULE: FRIDAY AFTERNOON
Task brief
The text below is a translation of an article that was published on the website of Polityka, a
Polish current affairs weekly. The translation was done by a mother-tongue speaker of
Polish.
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High risk tourism
Travelling without a smile
Travel agency bankruptcies reminded us of the dark sides to sunny holidays. Not only
can we catch a disease, but also unexpectedly find ourselves with a suitcase on the
beach, waiting for a plane to take us home. Is there anything we can do to prevent this?
There had been whispers in the tourism industry that Selectours is in bad shape for quite
some time. At least a year or two. There was some indirect evidence for this: the company
had failed to reveal their financial results for the previous year and was looking for an
investor nervously. Rainbow Tours, a listed company, betrayed some interest, but no deal
transpired. This should also be food for thought. Still, it was only whispers since no one can
officially assess an agency’s financial condition unless they themselves admit that they are
experiencing problems. And one cannot publicly voice any suspicions because it would be a
kiss of death for the company concerned. Many companies in the Polish foreign tourism
industry had suffered more or less serious difficulties, so it was hoped that Selectours can
somehow dig themselves out of their problems.
They were not a here-today-gone-tomorrow company. Active on the Polish market since
1992, Selectours was one of the big boys. It specialised in Middle East countries — Egypt,
Tunisia, Jordan and Morocco. Awarded multiple times, it enjoyed a good opinion among its
clients. Internet sites are full of favourable reviews for Selectours. Some are from the end of
August, i.e. just prior to bankruptcy. „Everything that the Selekturs [sic] travel agency
promised was true. There’s no scam. 8 days for 400 GBP. The accommodation and eatables
were super, the reef fantastic, and the animations and swimming pools excellent. It’s a shame
to leave”, a holiday-maker has commented. If he had gone to Egypt a week or two later, he
would have an opportunity to appear before cameras of TVN24 and say that he would never
forgive Selectours for ruining his holiday and that he would go to court for it.
Unlucky optimists
In response to the question why Selectours went bankrupt, the industry experts only smile.
Alpina Tour, Big Blue, SDS Holidays, El Greco, Open Travel or, one year ago, Kopernik, all
failed for the same reasons. Foreign tourism is a high-risk branch. Overly optimistic sales
plans and cash flow problems are sufficient. The art lies in predicting clients’ demand for
trips abroad and their preferred destinations before the season starts. Next one needs to
reserve the right amount of hotel rooms and seats on chartered flights. After the contracts are
signed, and the deposits and advance payments are made to hoteliers and flight carriers,
there’s no going back. If an offer is sold at the earlier calculated price, the company makes
profits, if not – problems begin.
This year seemed very promising. The previous year had also been decent, because Polish
tourists, despite the economic crisis, hadn’t lost their appetite for foreign trips and one could
have judged that 2010 should be similar or better still. „In the first quarter we had sales 20%
higher, compared to the same period in 2009. Everything suggested this year’s results would
be excellent”, explained Krzysztof Piątek, president of Neckermann Poland.
And then came the day no one will forget – 10th April, 2010. The economy suddenly went
into depression. According to president Piątek, it wasn’t so much national mourning that
caused the depression as constant media analyses of the Polish president’s plane crash in
Tupolev. Tourists don’t like watching the remnants of crashed aeroplanes when they set off
for their holidays abroad. It puts many people off from plane travel. In any case, the
Icelandic volcano erupted shortly thereafter, paralysing air traffic over Europe. For travel
companies this meant another reduction in clients and additional costs related to the
impossibility of getting people to and from their destinations as planned.
Next came the Polish floods, which also limited demand for foreign holidays. Strikes started
in Greece which, in the opinion of Polish travel agency bosses, were given too much TV
airtime. Although the incidents shown on TV concerned Athens, and not Crete, Corfu,
Rodos, or Zakynthos, the clients, fearing potential problems, chose not to go to Greece and
many decided to stay at home. All the optimistic forecasts fell through. Now, instead of
generating profit, travel companies had to think intensively about how to minimize losses.
To this end, travel agencies opted for promotions and last minute offers, because if one has
to choose between sending a half empty plane or selling the tickets for half price, one
chooses the latter.
„Someone who pays 200 GBP for a week in Egypt should be aware that this price barely
covers transport costs. What about accommodation costs? This should be a warning signal”,
explains president Piątek.
Travel pyramid
Tourist agencies that overestimated the market potential usually try to escape forwards and
find new clients at any cost in order to fill the aeroplanes and booked hotels in the hope that
the economy will improve. This means that they begin to operate like a financial pyramid:
the money from new clients pays the bills of their predecessors’ holidays. Such a mechanism
works during the holiday season but, as autumn approaches, it begins to fail. There are fewer
new clients and the expenditure for old ones rises. And to cap it all, agencies have to face
exchange rate fluctuations, which this year particularly affected companies specialising in
the Middle East. For transactions there are calculated in USD, and Polish zloty weakened
against the USD.
Another option is to claw back losses on winter offers, but not everyone specialises in winter
tourism because the market is much smaller than the summer one. Autumn is therefore the
moment of truth for each travel agency. „This year the situation of the tourism branch is not
good and one can expect at least one more big boy to go down”, forecasts Tomasz Starzyk of
Dun&Brudstreet, an economic intelligence company whose analysis suggests that 67% of all
travel agencies are in a bad or very bad financial condition. These alarming data are
confirmed by the reports of the National Debt Register. „There were 94 travel agents on our
list of debtors in June, yet towards the end of August – 134”, informs KRD spokesperson
Andrzej Kulik.
But this season proved unsuccessful for tourism not only in Poland. In Great Britain, three
travel agencies folded. Firms in Hungary and in Slovakia also went to the wall. Each time
they went bust they stranded tourists in far-away countries as well as those who paid for their
holiday and were about to leave. Rage, disenchantment, wasted time and money – that is the
balance sheet of the holiday plans of people who trusted the bankrupt companies. For the
insurers and public authorities, this means significant costs and effort connected with
organising the return home of the unlucky tourists.
As far as Selectours is concerned, the Marshal of the Mazowieckie Voivodeship had to
ensure, within several dozen hours, an emergency journey home for over one thousand
tourists in Egypt, Morocco and Turkey. The government of the voivodeship where the travel
company is registered has, pursuant to the Tourist Services Act, an obligation to ensure that
all tourists can return home. This is paid for by the insurer with whom the travel agency has
taken out mandatory insurance, in this case – Signal Iduna. A large majority of travel
agencies are registered in Warsaw, thus the Office of the Marshal of the Mazowieckie
Voivodeship is already experienced in rescuing the clients of bankrupt agencies.