Travel agencies are often perceived as intermediaries who ‘click’ with a mouse and book beds, airline seats, excursions, occasionally provide tour guide services, and live off commissions.
The truth is not quite so: in global practice, various industries have seen travel agencies as partners for decades due to their most valuable potential – a network of contacts in markets that are difficult to penetrate on their own. For some time now, we have an example in Croatia with Agrokor, which has entered the ownership of adriatica.net, which primarily conducts agency business through Atlas, and recently also Uniline, which has signed a contract with Podravka.
Uniline and Podravka have signed a non-binding agreement to utilize their acquaintances, i.e., to assist in contracting business in markets where one has better contacts than the other and to collaborate primarily in marketing activities. Some tourism experts are surprised that Atlantic Group has not shown interest in tourism so far, considering the approximately 10 million potential users of its products. Namely, by partnering with agencies, better access to the HoReCa channel is obtained, especially to hoteliers.
The most common partnerships with agencies are related to the food industry, transportation, banking, and insurance companies. However, the closest partnership is that between tour operators and the hotel industry, as best demonstrated by the examples of the TUI group and Thomas Cook, who, for instance in the Balearics, compete over who will have more beds. Of course, airlines and ‘rent a car’ companies go hand in hand here, as well as retailers – such as the Rewe group, which has in its portfolio the Billini store chain and the large tour operator ITS. In most European shopping centers, partner travel agencies are present, as is the case with adriatica.net’s branches in our country. In Croatia, the first such move was made by then CEO of adriatica.net, Marko Vojković, by merging adriatica.net and Agrokor. Many experts agree that the concept was strategically ideally conceived, but operationally it was not fully executed as it should have been. – It is a very well-conceived concept of creating a serious national ‘wholesaler’ that, unfortunately, has not been best realized, which does not mean that the basic idea was bad. The inclusion of Agrokor in this process clearly shows the interest of the food industry and wholesale trade, and I believe, not for the agencies themselves, but for their relationships with hotels in Croatia, which heavily depend on reservations from the agency distribution channel – explains Željko Trezner, an expert in agency business, lecturer at the Vern Polytechnic, and current director of the Association of Croatian Travel Agencies.
Namely, more than 40 percent of hotel reservations are made through domestic agencies. If we add foreign agencies that operate with domestic hotels, we can say that the share of agencies in hotel bookings is around 60 percent.
In addition to closely collaborating with Atlas in organizing business trips, in cooperation with companies from the Agrokor Group, adriatica.net designs tourist products such as wine road and cellar tours, wine tastings, various eno-gastronomic programs, grape and olive harvesting, etc. For tourist purposes, the offerings of Belje, Iločki Podrumi, Agrolaguna, and the Goldschmidt estate are used. Guests are evidently interested in programs that emphasize agricultural and viticultural activities, which include tours of the PIK Vrbovec facilities and the production facilities of Belje and Agrolaguna, for which specialized groups from the European Union are increasingly interested.
– Our strategic product in the upcoming period remains Croatia and the Adriatic region. We pay the most attention to our main European emitting markets and distant destinations, the BRIC countries. In developing new markets, we have focused on those like the Middle East and Israel, where we are directing ourselves towards charter operations – emphasizes Nikolina Frklić from adriatica.net.
In Croatia, the partnership potential of the transportation and agency business has not yet been fully utilized, but there are several examples where bus operators also have their own travel agencies, as well as Croatia Airlines with its agency Obzor putovanjima. However, this concerns a small number of passengers.
The first to connect with agencies in Croatia were banking and card companies, which took advantage of the fact that 95 percent of foreign tourists come to Croatia. All countries whose airlines participate in the ‘Miles&More’ program issue ‘co-brand’ cards, as is the case in neighboring countries: Austrian Airlines with Diners Club and MasterCard, in Slovenia Adria Airways with Diners Club, in Germany Lufthansa with MasterCard, in China Huaxia Bank with MasterCard, etc.
The first franchise agreement with a card company in former Yugoslavia was signed by the travel agency Generalturist in 1969 with Diners Club International. Initially, the cards were accepted in hotels, travel agencies, and restaurants, and then elsewhere and for other payment purposes. The share of transactions by foreign tourists in summer compared to total transactions can rise to 80 percent. Globally, the trend of vertical and horizontal integration may be at its peak. The consequence of horizontal integration in some markets is that only two largest players control more than 80 percent of the package arrangement market, as is the case in the United Kingdom and Belgium. Vertical integrations, on the other hand, have connected all relevant service providers in the tour operator value chain.
– In the future, it would be interesting to see the connection of the largest European tourist groups with our hotel companies. It should not be overlooked that TUI directly controls about 170,000 beds, which is more than there are in all of Croatia, and Thomas Cook about 80,000 beds and that the effort is primarily invested in filling the capacities of related companies – concludes Trezner.
According to data from the State Bureau of Statistics, in Croatia in 2011, more than a thousand travel agencies and their branches were registered, which was 13 percent more than in 2010. In the first nine months of this year, tour operators achieved 15.5 percent more revenue.
Agencies may be intermediaries between travelers and destinations, but they should certainly also be viewed as intermediaries that can market your products and services, the ideal HoReCa channel that the world has long recognized and which will not hesitate to implement this practice in Croatia.
