«There are tour operators that offer very cheap travel packages significantly below their actual cost. It is clear that such a business strategy is not sustainable. People have to keep in mind their trips might never happen. We try to educate our clients and explain that free cheese is only in the mousetrap – tickets do not come free and no one pays EUR 1 for hotel rooms,» – said Novatours manager Leonid Mocenov in his interview to BNN.
What are some of the most notable recent events in your sector?
While in the past developments in tourism industry were influenced heavily by the economic situation, now changes are related to political processes in Europe and elsewhere – events in Russia, refugee flow and the threat of global terror. Political events definitely influence Latvia’s tourism industry as well. Latvian and foreign tourists are now more careful in their choice of places to visit. There is a tendency in Europe – demand for specific destinations is changing. This affects offers and prices around the world. Political processes have also affected Novatours – after the terror act in Tunisia, we stopped offering trips to that country.
Can you say economic conditions are improving and there is a lot of potential for economic growth in the market?
Novatours celebrates its 15th jubilee this year. Ever since 2012, Latvia’s tourism industry has been experiencing growth. However, in comparison with the growth before the crisis, the current market growth is slower and more adequate. It is a positive tendency. We also see that every year more and more people plan their trips in advance. This means they also plan their expenses. We launched early sales of rips approximately half a year prior to the beginning of the season. Every year more and more people use the opportunity to buy offers with a discount of up to 50%. We started sales of winter season trips in May. As a result, nearly all flights are full right until the end of the year. The tendency that shows clients are more and more willing to plan ahead means travellers are certain about their future.
How would you describe the government’s economy policy aimed at improving the economic situation in the country?
If we look at the tourism industry as a whole, it is currently stable. We do not expect further growth of the market and economic growth. We don’t expect any new players to enter the market as well. In terms of our government’s efforts to support our industry, I would say it would be worth sorting out legislation – introduce stricter regulations to protect travellers.
How is the industry affected by Latvia’s policy? What changes to legislation would you like to see? What helps? What makes things more complicated?
Latvia’s tourism industry is not all that well controlled – responsibility for the safety and comfort of travellers lies with each tour operator. What we seen now is a situation when tourism operators that offer very cheap trips, far below their actual costs. It is clear that this business model is not sustainable. People who use such services should keep in mind that their trips might never happen. We try to educate our clients, explain that free cheese is found only in mousetraps. If there are any free seats left in flights, there could be some last-minute offers. But if some travel agency offers a trip for a little over EUR 100, it is unlikely such a trip will even take place in the first place. In order to protect travellers from any negative experiences and avoid discriminating the entire industry, it would be best to adopt rules for licensing tour operators. I believe such rules would serve as guarantees. Otherwise no one will be safe and travellers will have no hope of returning the money they pay for flights and other services. There were once rules that prevented tour operator board members with negative experience from founding new tourism companies. Those rules protected people once, but they are no longer in force. We have talked to Economy Ministry, Latvia’s Tourism Agency and ALTA about this. However, we have yet to find an appropriate solution to this problem. Tourism regulations in Lithuania and Estonia, on the other hand, are organized far better.
How would you describe the industry’s position in the Baltics? What about competition with Estonia and Lithuania?
Tourism industry in Latvia is similar to that in Estonia. Both countries have their own national airlines – we have airBaltic and Estonia has Estonian Air. Our market segmentation is similar as well. The situation in Lithuania is different, because Air Lithuanica went bankrupt this year. With that, there is very little actual competition in Lithuania at the moment. At the same time, new players would be more interested in Latvia, which can be explained with the country’s geographical location – in the middle of the two other Baltic States.
What can you can your ‘trump card’? What is your ‘Achilles’ heel’?
Latvia’s tourism industry is made stronger with it national airline, developed international airport and a wide range of destinations. Our weak spot is the aforementioned lack of regulation of the country’s tourism industry.
Can you say there is a lack of skilled workers in Latvia?
I can say that Novatours has no problems with attracting new employees. This is mostly thanks to our reputation, because we are the leading tour operator in Baltic States and a stable player in the tourism industry with 15 years of experience. Employees know that.
What do you predict for the next five years? Will the situation in the industry improve, worsen or remain the same?
The tourism industry has reached a peak in terms of demand. We expect a similar amount of work in the near future. Changes are expected in the market’s segmentation. We also expect some change in the flow of sales. Considering current trends, it is clear that the number internet orders will increase. Because of this we have begun investing in development of a new service – we have created a hotel booking system titled ‘Travel on Spot’. It allows customers to choose and book rooms in hotels around the world. Travel agencies that currently sell the majority of our travel offers will remain just as strong a sales corridor in the future. It is also worth mentioning that there has been an increase in the interest of foreigners for travel opportunities to Latvia. With that, we now consider developing a new business direction – host tourism.