How Szallas Built an OTA Powerhouse in Central and Eastern Europe

The travel industry looks to the future with optimism in 2022, looking to capitalize on strong demand. Amid this resurgence, the Central and Eastern European market is brimming with potential. Home to over 100 million people, it is by no means uniform. Actors in the region must work across multiple major languages ​​and contrasting cross-border financial and political regulations, to name a few key considerations. Businesses that can integrate regional disparities through technology while maintaining a localized customer service and marketing focus have huge benefits. It is not an easy task.

The escalating war in Ukraine has added another complication to an already shaky travel industry. Yet it seems that instability and inflation have not extinguished the desire to travel. These situations have only amplified the benefits of regional OTAs in markets like Central and Eastern Europe, as domestic and regional travel remains the most in demand.

SkiftX recently spoke with József Szigetvári, CEO of Szallas Group, the largest regional player in the online travel agency (OTA) market. Based on the ideas of White paper recently published by Szallas Group On key trends in the region, Szigetvári explained why Central and Eastern Europe is ripe for investment due to its unique traveler trends, how Szallas has been able to grow alongside this booming market and gain market share. market during the pandemic, and why the post-pandemic period will be an excellent time to invest in the travel sector in Central and Eastern Europe.

SkiftX: Can you give me some information about the Szallas group, its origins and its current position in the market?

Jozsef Szigetvari: Szallas Group started in 2007 as a small online travel agency in Hungary. We first focused on domestic and family travelers visiting small and medium-sized destinations versus travelers visiting larger, more typical markets like Budapest, Prague and Warsaw. This is an important part of the company’s history, as approximately 80% of travelers to this region are domestic travelers only – typically family travelers looking for small to medium sized accommodations. It’s a huge number.

In 2015, we achieved 15% market share in the Hungarian travel market, which grew to 31% by 2021 – that’s the share of the total domestic market, not just the digital market. To expand the success, we decided to expand to many countries, as we knew that Hungarians traveled a lot to these countries.

We also realized that the Polish and Czech travel markets were similar to the Hungarian travel market, which led us to acquire similar OTA brands in these countries. Today we operate in Hungary, Czech Republic, Romania, Poland and Croatia with six major brands: szallas.hu, maiutazas.hu, hotel.cz, spa.cz, travelminit.ro and noclegi.pl. We have grown our market share in the region from approximately 6% of the domestic online market in 2019 to almost 9% in 2021.

SkiftX: What have been the keys to the growth of the Szallas group?

Szigetvari: We were able to grow by helping to digitize hosting providers. When we started our business, many didn’t even have an internet connection. Because we make them aware of the potential of digital, we have a unique inventory and have won their trust. 14,000 new hosts joined our platform in 2020 and 2021.

SkiftX: Where do you see future growth opportunities in the Central and Eastern European market?

Szigetvari: Digitization is fueling market growth. Only around 60% of trips are booked online in Central and Eastern Europe. That leaves us with 40% of the market where we can grow.

Additionally, cross-country travel in Central and Eastern Europe was the fastest growing travel market in Europe between 2015 and 2019, as people realized they could easily travel across countries and discover new more and more beautiful destinations in the region. This will only get stronger after the Covid era as they can travel safely by car and will have fewer restrictions and cancellations.

In addition, domestic travel benefits from government programs aimed at boosting tourism, particularly in Romania, Hungary and Poland.

SkiftX: With so much room for growth and market share to be gained, what’s stopping global online travel agencies from reading this and deciding to come and compete directly with you?

Szigetvari: The easy answer is that it’s not that easy. You can access major global markets without really needing to change your business model. All of the major global players in this region focus on the big cities, and their main customers traveling to Budapest, Prague and Warsaw tend to be German, English or French. When you only focus on big cities, you don’t really know domestic tourists.

For comparison, when you talk about Southeast Asia, the customer types and user behaviors in the region are quite similar, but each country is a little different. Each country has a different language, different hosting providers, different payment providers.

This is very similar to the Central and Eastern European region. We work with local brands and have local customer service, sales and marketing teams that speak the local language in all countries in the region. When we speak to travelers from Poland, we speak as a Polish company that understands the Polish market. This trust is very important.

SkiftX: Given their unique identities, not to mention the different languages, currencies, payment systems and government regulations, how did you manage to bring these different brands together to provide a cohesive experience? In other words, how is your business model changing?

Szigetvari: We’ve built a unique integrated technology platform with five unique brands that the traveler engages with from start to finish, from finding inspiration on the website to writing the review. And we continue to develop the platform to provide the best user experience across the region.

SkiftX: How has Covid affected the CEE market and your business in particular?

Szigetvari: I never would have thought that the Szallas Group would benefit from Covid in March 2020, but because we understand the national markets so well, we recognized how we could help travelers discover hidden gems in the incredible national destinations for which we always work hard. offer.

Foreign and domestic tourism was closed across Central and Eastern Europe for five months in 2021, but we still achieved a higher gross booking volume for the rest of the year than for the whole of 2019 This was due to our deep understanding of local market changes and an agile reaction to extreme changes, which required rapid adaptation and the use of months of confinement to prepare.

SkiftX: Given that the Szallas Group operating in all major European countries is Ukraine, how is the ongoing war affecting the hospitality market in the region?

Szigetvari: Since the early days of war, we have worked tirelessly to support refugees both as a business and as individuals.

We watch the fierce defense of the Ukrainian nation with awe and admiration and continue to be stunned by the daily destruction that occurs in that country. Yet we realize with confusion that the travel industry in Central and Eastern Europe continues as before, with almost no disruption.

In all of our markets, we are seeing booking numbers above 2019 levels, and our data shows that domestic and cross-country tourism will continue to grow, along the path we have envisioned.

SkiftX: What is the next step for Szallas Group?

Szigetvari: An investor asked me where I see the company growing, and I said we want to grow to be number one. 1 choice for traveling in the Central and Eastern Europe region. We see huge potential for the next three to five years, so we are focusing our full attention on supporting the growth and integration of regional tourism. We seek to maximize the potential of intra-regional and transnational tourism in cooperation with other regional tourism players, considering other potential acquisitions in the region and launching new digital tourism products. We are also looking to expand to countries like Bulgaria and Montenegro, which are growing very rapidly.

To learn more about the main trends in the Central and Eastern European market, please download the new white paper from the Szallas Group, the EEC Tourism Report 2022.

This content was created in collaboration with Szallas and Skift’s branded content studio, SkiftX.