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Travel agencies resist online onslaught

The Swiss enjoy heading to foreign destinations Keystone

The Swiss travel industry's turnover increased for the third year in a row in 2006 on the back of the strong economy. Earnings increased on average by 50 per cent.

According to a study into the sector, Switzerland’s travel agencies have survived the presence of internet sales, but they are being forced by this increased competition to improve their quality of service.

The latest survey of members of the Swiss Federation of Travel Agencies, published by bank Credit Suisse on Tuesday, showed that turnover grew by 10.8 per cent to an estimated SFr13 billion ($11.1 billion). It said travel agency earnings had on average increased by around 50 per cent.

According to the report’s authors, the robust economy and the absence of negative external factors helped the positive trend.

Credit Suisse analyst Elke Frost said that growth was expected to continue in 2007, but would be flatter at between five and ten per cent.

Prices would, however, continue to rise as a result of high demand, she said.

Economists at Credit Suisse also expect demand to continue for destinations abroad. The strongest growth region is likely to be Asia, according to travel agents, but demand for European and American travel should remain brisk.

The most favoured destinations are likely to be Thailand, the United States and China. In Europe, Greece, Spain and Croatia come out on top.

Frost said that tourists were now returning to Thailand because the country had rebuilt itself after the devastating tsunami of 2004.

Travel fears

The Elvia travel insurance company’s annual survey of booking behaviour of the Swiss – released in parallel with the Credit Suisse study – shows that travellers still suffer from some anxiety when choosing their holiday destinations.

For more than a third of those surveyed, unrest or terrorism represents the greatest risk when travelling. Almost half of those who book a trip check up on the political situation in the region they intend to visit.

On the other hand, fears of accident or illness have tailed off.

The Credit Suisse research also showed that more than four out of five travel agencies see internet sales growing further in the coming year. More than one third of those polled said they already felt strong competition from web-based sellers.

The Elvia survey showed that more than a quarter of travellers booked their vacations via internet, around the same number who go to an agency for the same service.

Increasing pressure

Credit Suisse economists said that better online services meant customers were able to compare prices more easily, increasing pressure on traditional sellers.

Simple products such as flights and hotels are often booked over the web, while tours and customised products are still the preserve of the agencies.

But the bank’s specialists warned that the internet was expected to gain more market share, and that traditional sellers would have to concentrate on personalised advice and matching products to customer needs.

They said this meant consumers could expect better quality of service in the future.

swissinfo with agencies

Swiss travel agencies saw their sales increase by 10.8% last year, reaching an estimated SFr13 billion ($11.1 billion).
Between 2000 and 2005, the number of travel employees fell by 7%.
In 2006, there were 10,400 people employed in travel sales (-0.8%).

Credit Suisse, the country’s second largest bank, and the Swiss travel agency federation poll agents every year.

This year, agents were asked about the role played by the internet. Many agencies said that they had developed their own online services, with most of them offering a booking service.

Overall in Europe the online travel industry was worth €40 billion in 2006, a seven-fold increase over the past 5 years.

In Switzerland internet bookings have risen too. They now account for 10% of reservations, compared with just 4% three years ago. They are expected to increase to around a third in the future, in line with neighbouring countries.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR