Travel market holds its ground in a difficult environment

The Germans bank on classical seaside travel destinations and fulfil themselves dreams in respect of long-haul trips: Greece, Tunisia, the Canary Islands as well as the Caribbean destinations Cuba, Do

Travel market holds its ground in a difficult environment

The Germans bank on classical seaside travel destinations and fulfil themselves dreams in respect of long-haul trips: Greece, Tunisia, the Canary Islands as well as the Caribbean destinations Cuba, Dominican Republic and Mexico are the vacation countries of the Germans which record the highest growth rates this year. “No other country was able to grow stronger than Hellas – and this already for the second time in a row. This is a brilliant comeback”, the President of the German Travel Association (DRV), Norbert Fiebig, stated at the DRV Annual Convention in Abu Dhabi. The uptrend in the Caribbean has been attributable to modernized and new hotels, so that the wide choice and value-for-money ratio were convincing. Slight growth rates were also recorded by the German tour operators for Turkey and the United Arab Emirates (UAE). Spain maintains its position as most popular foreign travel destination. Compared to the previous year, less travelers were attracted by Egypt and Thailand.

At the Annual Convention of the travel industry association DRV President Fiebig presented, moreover, the first projections of the results for the just ending tourism business year 2013/14 (cut-off date: 31 October). The numbers show for the tour operator market altogether a growth in turnover in an order of magnitude of 2%. The cruise business developed significantly better than this overall market growth rate. According to the evaluations of the DRV Committee Statistics and Market Research, total turnover on the operator market is likely to climb to a total of EUR 25.8 billion. The final results will be published by DRV at the ITB Berlin in March 2015.

DRV President Fiebig stressed that the growth rates achieved are noteworthy, more particularly against the backdrop of numerous external factors and influences during this year. This included crises – such as in the Ukraine, Israel, Egypt, Syria and Iraq, the Ebola epidemics in Western Africa as well as the ISIS threats, but also strikes by pilots and locomotive engineers. Moreover, the Football World Cup made many citizens hesitate in their vacation booking. After the triumph of the German team, the extremely narrow time window of the summer holidays (corridor of 71 days) resulted in capacity bottlenecks at the airports, so that not all customers willing to travel were able to fly to their destination.

The fact that at the end of the day a positive result adorns the financial statements proves the strength of the tourism industry. “The travel industry has already survived many crises in the past and mastered them professionally. Apart from the crisis business year 2009, our industry has constantly grown. This also occurred this year. We are a true tower of strength”, says Fiebig.

Travel distribution with higher turnover – number of travel agencies continues to increase.

The high street travel agencies will probably achieve a growth in turnover between 1 and 2% at the end of the calendar year ending on 31 December 2014. The same range will be achieved for the increase in turnover of the online travel agencies, which has hence significantly weakened. Last year the percentage increase in turnover of the online travel agencies (i.e. portals which have a full offer of package tours) was still in the upper single-digit range.

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After declines during the past years, the travel agencies will also record a rise in turnover in the business travel segment – forecast between 1 and 2%. For the entire distribution market (leisure and business travel) this results in a turnover volume of probably EUR 23 billion. “After the record values of the past years, the travel agency distribution in Germany generates a new peak in turnover already during the second consecutive year”, DRV President Norbert Fiebig reported at the 64th Association convention.

High quality vacation trips recorded particularly strong increases amongst the bookings by travel agencies. According to the GfK market researchers, the upper price segments rose particularly strongly with a spending of more than EUR 3,000 per person. There was a more than 10% growth in that respect. GfK has, moreover, determined that a growing number of holidaymakers book their trips increasingly earlier. The highest growth in the travel agency market was recorded by bookings made more than six months in advance. This resulted in more than 13% increase in turnover for travel agents. Early bookers hence account for almost 30% of the total turnover. Last year this amounted to only 26%.

Particularly positive: for the first time since 2004 the number of high street travel agencies has again increased in Germany, by 100 to 9,829 travel agencies – i.e. around 1% more than last year. This includes 9,027 high street travel agencies with a tourism focus and 802 business travel centers.

Outlook: promising seasonal kick-off with favorable pricing

The winter season 2014/15, which has started with the travel month of November, is promising, according to the analyses by GfK. Cruises record so far a disproportionately high demand. A particularly high increase is also reached by bookings for Egypt. For the Christmas holidays seaside destinations such as the Canary Islands, Egypt and many long-haul destinations are sought after. It is, however, still too early for reliable statements on trends and a robust forecast for summer 2015, since the main booking wave has just started and many of the current external impairments continue to prevail or have not yet been solved.

During the coming weeks early booker rebates and more favorable prices will be available for many holiday regions. For the booking decision of the customers for their next summer vacation the price and exchange rate development plays into the travel agencies’ hands. The full packages of the travel catalogue operators are offered through travel agencies at favorable purchasing prices since the travel operators have hedged against the fluctuating Dollar exchange rate. Individual services such as flights, hotels or rented cars, which are put together at short notice individually and separately by customers, might cost more than the full offer of the travel operators.

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