Man who found a passage to profit
Saturday, 6 October 2007
Katka Krosnar
Radim Jancura came up with the idea for his travel company while standing outside the gates of Buckingham Palace.
As a student in the early 1990s, he was sightseeing in London when he got talking to a group of au pairs from his home country, the Czech Republic. He had never heard of au pairs but after a short conversation with them, he sensed an opportunity to undercut the high fees they were being charged for introductions to families. Two months later he had returned home to Brno and set up an au pair agency working with British agencies to send Czechs and Slovaks to Britain.
From this niche beginning the 35-year-old entrepreneur has transformed Student Agency into one of central and eastern Europe's largest travel companies, with expected turnover this year of around CZK3bn ($155m) and a 900-strong workforce. The company now has 200 buses making daily trips between cities in the Czech Republic, neighbouring Slovakia and western European cities such as London.
Mr Jancura's concept is deceptively simple: undercut rivals on price and throw in a raft of free services. Passengers in his distinctive yellow coaches sit on leather seats and are given hot drinks, newspapers and magazines. Fold-down TV screens offer films or radio broadcasts. Waiting travellers can use the internet for free in cafes at the coach station.
"It is all aimed at ensuring customers don't go to a rival service," he says.
The cost of providing such perks is relatively low, says Mr Jancura. It costs just Kc2 (10 cents) to provide each passenger with a cup of coffee or tea, for instance.
But getting the business off the ground was a struggle. Cramped and bare, Mr Jancura's first office in Brno comprised a borrowed desk and chair, a telephone and his sole asset - a fax machine bought for £100 in Britain. As a 21-year-old, he ran the company single-handed while studying for university degrees in electrical engineering and business studies.
"I sat virtually alone in that small room for months," he recalls, speaking from the company's offices that today occupy two floors of the same building.
The turning point came when Mr Jancura to spend his entire advertising budget of CKR7,000 ($300) on a poster campaign on trams. The phones began ringing and did not stop. Before long he had expanded his initial Prague-London bus service for au pairs, first into the market for language courses abroad, then air ticket sales and a wider network of bus services
In spite of the rise of low-cost airlines, Student Agency has two advantages. First, it can be much more flexible than airlines on luggage limits. Second, its fixed fares are far more attractive for people booking close to departure.
"The strategy has always been to offer the cheapest and best service and to plough all profit straight back into the company," says Mr Jancura, whose business also benefited from being launched just as restrictions on Czechs and Slovaks travelling abroad were relaxed.
Profits from the bus services rely heavily on a high average occupancy rate of 90 per cent. The Prague-Brno route runs every 30 minutes and at peak times there can be four buses leaving at the same time.
Modest, soft-spoken and laid-back, Mr Jancura works in jeans, shares his office with three others and has no press officer to deflect calls. All employees are instructed to give out his mobile number to any disgruntled passengers if they ask to speak to the boss.
He expects his workers to apply high standards. As a way of maintaining levels of customer satisfaction, for instance, he hires students as undercover customers to test employee performance. Each worker is put to the test roughly once a month.
Realising three years ago that there were "too many employees and too few managers", Mr Jancura decided to train up more of his staff to run the business. With one exception - the company's marketing manager - he has never hired managers externally. The policy has helped the company retain expertise, while freeing up Mr Jancura to focus on expansion and less on day-to-day operations.
"The advantage of promoting people internally is that we know them already and they know the product and are more loyal, although it can be difficult for them to adjust initially. Of the 15 people who worked here 10 years ago most are now managers in the company," he says.
Ninety per cent of his workforce is female: Mr Jancura says women are more responsible than men, harder-working and, unlike their male counterparts, not constantly looking to better their careers.
Still, there have been obstacles on the road to success. One regret is his choice of name for the business (see below). Another was a venture offering package holidays to the Olympic Games in Greece, which proved an expensive failure. Despite their active lifestyle, he says, he misjudged Czechs' interest in watching sport.
Mr Jancura has ambitions to take his "luxury-for-low-cost" model into other sectors. He plans to launch rail services on the country's dated railway network, initially between the capital Prague and the eastern industrial city of Ostrava in 2010.
"A ticket from Prague to Ostrava will cost half of the fare on the existing local express service," he says, adding that passengers will get all the perks found on his existing bus services.
Setting up the service will demand a hefty investment of $100m. Having so far raised 5 per cent, with a bank loan agreed for another 90 per cent, Mr Jancura is now considering launching the rail division as a joint venture with an investor to raise the other 5 per cent.
Mr Jancura, who was named Czech Entrepreneur of the Year in 2005 by Ernst and Young has clear views on the attributes required of business founders. "The most important thing for an entrepreneur is to be strong-willed because the rewards from setting up your own business take a long time. I'm also very pedantic, which is not a good thing for life in general but a very good thing in business," he says.
He remains Student Agency's sole shareholder and is reluctant to relinquish control by selling a stake or launching an initial public offering.
"If I was starting again I would do it all exactly the same. But it would not be as easy now to start a company with £100," he says. "In the early post-communist years almost anything was possible."
'I considered renaming it, but it was such a well-known brand'
Radim Jancura's biggest regret is the name he chose for his company. While Student Agency seemed an appropriate brand for the company at its launch, today about 80 per cent of its customers are non-students.
"Back then I just saw a good business opportunity, and I never dreamt the company would grow into what it is today," says Mr Jancura. "But now it's a disadvantage, as some people think our company caters only for students - that it's cheap and not high-quality.
"A couple of years ago I considered renaming it, but market research showed it was such a well-known brand that it would be better to keep the name."
The solution came in 2002, when he decided to establish a sister company called Orbix that would cater specifically for corporate clients. Services offered by Orbix include the sale of air tickets, accommodation, car rental and management training courses abroad.
Radim Jancura came up with the idea for his travel company while standing outside the gates of Buckingham Palace.
As a student in the early 1990s, he was sightseeing in London when he got talking to a group of au pairs from his home country, the Czech Republic. He had never heard of au pairs but after a short conversation with them, he sensed an opportunity to undercut the high fees they were being charged for introductions to families. Two months later he had returned home to Brno and set up an au pair agency working with British agencies to send Czechs and Slovaks to Britain.
From this niche beginning the 35-year-old entrepreneur has transformed Student Agency into one of central and eastern Europe's largest travel companies, with expected turnover this year of around CZK3bn ($155m) and a 900-strong workforce. The company now has 200 buses making daily trips between cities in the Czech Republic, neighbouring Slovakia and western European cities such as London.
Mr Jancura's concept is deceptively simple: undercut rivals on price and throw in a raft of free services. Passengers in his distinctive yellow coaches sit on leather seats and are given hot drinks, newspapers and magazines. Fold-down TV screens offer films or radio broadcasts. Waiting travellers can use the internet for free in cafes at the coach station.
"It is all aimed at ensuring customers don't go to a rival service," he says.
The cost of providing such perks is relatively low, says Mr Jancura. It costs just Kc2 (10 cents) to provide each passenger with a cup of coffee or tea, for instance.
But getting the business off the ground was a struggle. Cramped and bare, Mr Jancura's first office in Brno comprised a borrowed desk and chair, a telephone and his sole asset - a fax machine bought for £100 in Britain. As a 21-year-old, he ran the company single-handed while studying for university degrees in electrical engineering and business studies.
"I sat virtually alone in that small room for months," he recalls, speaking from the company's offices that today occupy two floors of the same building.
The turning point came when Mr Jancura to spend his entire advertising budget of CKR7,000 ($300) on a poster campaign on trams. The phones began ringing and did not stop. Before long he had expanded his initial Prague-London bus service for au pairs, first into the market for language courses abroad, then air ticket sales and a wider network of bus services
In spite of the rise of low-cost airlines, Student Agency has two advantages. First, it can be much more flexible than airlines on luggage limits. Second, its fixed fares are far more attractive for people booking close to departure.
"The strategy has always been to offer the cheapest and best service and to plough all profit straight back into the company," says Mr Jancura, whose business also benefited from being launched just as restrictions on Czechs and Slovaks travelling abroad were relaxed.
Profits from the bus services rely heavily on a high average occupancy rate of 90 per cent. The Prague-Brno route runs every 30 minutes and at peak times there can be four buses leaving at the same time.
Modest, soft-spoken and laid-back, Mr Jancura works in jeans, shares his office with three others and has no press officer to deflect calls. All employees are instructed to give out his mobile number to any disgruntled passengers if they ask to speak to the boss.
He expects his workers to apply high standards. As a way of maintaining levels of customer satisfaction, for instance, he hires students as undercover customers to test employee performance. Each worker is put to the test roughly once a month.
Realising three years ago that there were "too many employees and too few managers", Mr Jancura decided to train up more of his staff to run the business. With one exception - the company's marketing manager - he has never hired managers externally. The policy has helped the company retain expertise, while freeing up Mr Jancura to focus on expansion and less on day-to-day operations.
"The advantage of promoting people internally is that we know them already and they know the product and are more loyal, although it can be difficult for them to adjust initially. Of the 15 people who worked here 10 years ago most are now managers in the company," he says.
Ninety per cent of his workforce is female: Mr Jancura says women are more responsible than men, harder-working and, unlike their male counterparts, not constantly looking to better their careers.
Still, there have been obstacles on the road to success. One regret is his choice of name for the business (see below). Another was a venture offering package holidays to the Olympic Games in Greece, which proved an expensive failure. Despite their active lifestyle, he says, he misjudged Czechs' interest in watching sport.
Mr Jancura has ambitions to take his "luxury-for-low-cost" model into other sectors. He plans to launch rail services on the country's dated railway network, initially between the capital Prague and the eastern industrial city of Ostrava in 2010.
"A ticket from Prague to Ostrava will cost half of the fare on the existing local express service," he says, adding that passengers will get all the perks found on his existing bus services.
Setting up the service will demand a hefty investment of $100m. Having so far raised 5 per cent, with a bank loan agreed for another 90 per cent, Mr Jancura is now considering launching the rail division as a joint venture with an investor to raise the other 5 per cent.
Mr Jancura, who was named Czech Entrepreneur of the Year in 2005 by Ernst and Young has clear views on the attributes required of business founders. "The most important thing for an entrepreneur is to be strong-willed because the rewards from setting up your own business take a long time. I'm also very pedantic, which is not a good thing for life in general but a very good thing in business," he says.
He remains Student Agency's sole shareholder and is reluctant to relinquish control by selling a stake or launching an initial public offering.
"If I was starting again I would do it all exactly the same. But it would not be as easy now to start a company with £100," he says. "In the early post-communist years almost anything was possible."
'I considered renaming it, but it was such a well-known brand'
Radim Jancura's biggest regret is the name he chose for his company. While Student Agency seemed an appropriate brand for the company at its launch, today about 80 per cent of its customers are non-students.
"Back then I just saw a good business opportunity, and I never dreamt the company would grow into what it is today," says Mr Jancura. "But now it's a disadvantage, as some people think our company caters only for students - that it's cheap and not high-quality.
"A couple of years ago I considered renaming it, but market research showed it was such a well-known brand that it would be better to keep the name."
The solution came in 2002, when he decided to establish a sister company called Orbix that would cater specifically for corporate clients. Services offered by Orbix include the sale of air tickets, accommodation, car rental and management training courses abroad.