The Macro Headwinds and Tailwinds of Winter Travel
What Invia.cz, RegioJet, FlixBus, Ryanair, and Kiwi.com say about Winter travel
The significant economic downturn and high prices of essential products, including food, are today's reality. The reality where people save money to stay warm this winter, see loved ones on Christmas break and travel during the upcoming holidays. The reality where people cut their spending on leisure and spare time. The reality where expenses become unbearable.
How did the new reality change the Czech Republic and its travel industry? Let's find it out together, so buckle up and prepare for some financial enlightenment!
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Czech Republic and Inflation: A toxic relationship
Inflation did not leave out the Czech Republic from its radar. Quite the opposite. It hit the country right on the bull's eye with a rate of 18% in September 2022, surpassing the highest inflation rate since December 1993, recorded by the Czech Statistical Office (CSO). Year-on-year inflation skyrocketed from 5.8% in October 2021 to 18% in September 2022.
Czech Statistical Office also reported the most inflation-affected industries. Among them are housing and utilities (electricity, gas, and other fuels), food and non-alcoholic beverages, transport, and tourism. There is no travel without gas, no delightful meal without electricity, and no life without electricity and food.
The travel industry and the upcoming Christmas holidays caught our attention, and I looked deeper into it concerning the current economy and inflation. Here is what I discovered on our financial adventure with 24Hour Journal!
The Bottleneck: Energy Prices
Energy prices do not only affect households and their heating consumption levels. They also affect transportation companies that continuously increase their operational expenses due to the high energy prices that do not know the word 'stop.'
Invia.cz, one of the largest travel agencies in the Czech Republic, recorded a price increase on tickets of 10-15%. "The holiday price reflects the rising fuel costs, increasing plane ticket prices. In addition, hotels and other accommodation facilities, in particular, are becoming more expensive due to rising gas and electricity costs and increasing personnel costs," said Jiřina Ekrt Jirušková, spokeswoman for Invia.cz.
"We are registering increasing prices of railway electric energy and fuel," said Kristýna Böhmová, a brand manager for RegioJet, a private Czech provider of passenger rail and bus transport.
Flix, a German brand offering intercity bus services across Europe, is also impacted by high fuel price levels. "Inflation combined with the energy crisis is increasing operational costs for Flix's mobility partners. For example, Europe is facing approximately 12% rise in expenses," highlighted Can Gümüş, a Business Analyst at Flix SE.
Interestingly, Gümüş stays positive and sees inflation as an opportunity for the FlixBus: "While all the prices are increasing, the price of operating a personal vehicle does too. This means not only operational costs are increasing for Flix, but also a number of passengers - taking the bus is usually cheaper than driving a car."
Gümüş is not the only one who perceives inflation as an opportunity. Ryanair, Europe's no. 1 low-cost airline, believes that price inflation can be good for Ryanair's growth: "Passengers do not stop flying completely during a cost of living crisis, times of high inflation, but rather become more price-sensitive and opt for cheaper airlines like Ryanair."
A golden ticket?
Not surprisingly, tickets are getting more and more expensive daily. Nevertheless, most transportation companies try to understand the potential hurdles of their customers and share their advice with them. As a vivid example, transport companies advise planning the journey to avoid additional and unpredictable charges that could be a mood killer.
"Even though ticket prices are rising, we try to keep travel as affordable as possible. The price is unchanged for early buyers, so at the moment, we recommend planning trips in advance," shared the secret tip Tomáš Beránek, spokesperson and PR Manager for the Czech Republic and Slovakia at FlixBus.
RegioJet also believes in the rational decisions of the customers, followed by their approach of buying tickets in advance rather than purchasing tickets spontaneously. "So far, we have not registered significant changes in customer behavior when purchasing tickets. Passengers behave according to the predictions adequately to the year's time," pointed out Böhmová.
In the study conducted by Kiwi.com, a Czech travel agency that provides a fare comparison tool, inflation has no direct impact on consumer demand. "It is true that due to the rising fuel prices, travel has become more expensive and should logically lead to a drop in demand. However, on the other hand, this year is the first year after the pandemic, where almost all countries around the world have dropped their entry restrictions and opened up their borders," concluded Julia Gumeniuk, Public Relations and External Communications Manager at Kiwi.com.
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When it comes to winter break and Christmas time, there are a lot of opportunities to choose from. Some people are eager to get out of their home walls and find adventures in other countries, whereas others prefer to stay in the Czech Republic and discover unbeaten paths. In any case, traveling brings joy and unforgettable emotions. So, what are the most popular destinations among Czechs and the residents of the Czech Republic?
According to the data presented in the Kiwi.com research, the majority of Czechs (41%) continue to plan their trips. Still, they prefer cheaper destinations or find possible ways to travel more affordably. During the holiday season, most Czechs (35%) plan to take 1-2 week long holidays in destinations in Italy, Spain, the UK, France, and Portugal, reported Kiwi.com.
"From closer countries, tourists are interested in Madeira, Egypt, and the Canary Islands. For skiing, our clients usually choose Austria, Italy or Czechia. Popular are also spa and wellness stays - in Hungary, Slovenia, or at Czech spa cities," said Kateřina Pavlíková, spokeswoman for Čedok, the oldest travel agency in the Czech Republic.
"During December, RegioJet customers like to visit nearby cities for Christmas markets, such as Vienna, Budapest, Krakow, Berlin, or Dresden. In the Czech Republic, the most visited cities are Olomouc, Prague, and Brno," concluded Böhmová.
Beránek also shared his opinion on the Advent season, the importance of being closer to the family and beloved ones, and rediscovering the beauty of Europe, including Christmas markets and their magical charm: "Many FlixBus passengers return home, and we are glad they choose our buses. Advent time is usually used for trips to see Christmas markets, with destinations in Dresden, Nuremberg, and Vienna."
For further destinations, Czechs tend to choose warm places: "The United Arab Emirates is leading the way so far, where 20% of Czech go to catch some sun. The most popular exotic countries are the Dominican Republic (14%), Zanzibar (11%), Maldives (10%), and Oman (9%)," concluded Jirušková.
Inflation in the Czech Republic is relatively high compared to the previous years, including the economic crisis of 2008. The prices have been rising continuously for the past couple of months, affecting the lives of every person. The only thing that is more resilient than price increases are the strong Czech spirit; by that, we mean Slivovice. Drink responsibly but don't plan your tip under the influence - you are most certain to overpay.