U.S. travel and tourism industry professionals who sell to the German market must be confused. Despite statistical as well as anecdotal references over the past month that might cause some receptive tour operators and travel sellers to cut back on their available offerings, in Germany itself, the country’s largest tour operator has increased Visit USA capacity for 2017, and air service between Germany is on track to increase.

While the Inbound Report has no special insight to suggest which of the views on the outlook for Germany is correct, we can present this brief summary of the gloomy and rosy views of what to expect next year for the fourth largest overseas country source market for visitors to the United States.

The Gloomy View

—In its current, posted long-term forecast for international arrivals to the USA, the U.S. Department of Commerce’s National Travel and Tourism Office has projected that 2016 will end with a three percent decline in arrivals from Germany compared to 2015. Its outlook then calls for mere one percent annual increases through 2019.

—Germany’s travel trade news media have been consistent in their reporting of accounts on the part of tour and travel industry leaders that are—while not dire—are less than sanguine about prospects for an increase in Visit USA business.

—There seems to be a consensus opinion among market experts that, because of the antipathy toward President-elect Donald Trump expressed by many Germans, a number of German travelers will simply cancel bookings to travel to the USA and/or change their travel plans for 2017 to take their holidays elsewhere.

—Overall, the retail travel trade in Germany is coming off a 12-month window that the market research organization GfK has described as a “lost year” for business. And its report that early bookings for summer travel for 2017 were up by one percent are little solace when one notes that a one percent increase over a terrible year is still below the pace for a normal year.

The Rosy View

Airlines must believe that the traffic will be there. In recent months, there have been the following announcements:

-Lufthansa‘s budget airline Eurowings will launch flights with its fourth A330 from Cologne/Bonn to Orlando and Seattle starting next July. There will be twice-weekly services to Orlando and three flights a week to Seattle.

–Other Eurowings USA destinations for next summer will include Boston, Las Vegas and Miami.

–Condor will add another Pittsburgh to its U.S. destinations next June with twice-weekly flights from Frankfurt. This news followed announcements earlier in the year in which the airline said it would begin service to San Diego and New Orleans.

-Delta Air Lines will expand its Germany flights to eight daily next summer with the start of seasonal summer flights from Detroit to Munich next May 2017.

 

In addition to increased air service between German and the USA, Tui—the Europe’s largest tour operator and largest purveyor of USA product to German travel agents and consumers—has added to its Visit USA inventory. For its summer program 2017 Tui has added some 200 new hotels and 30 round trips. In New York, there is now a dedicated service center right on Times Square, where guests are cared for two days a week.

And then there is the view among some travel trade professionals that schadenfreude might bring to the USA some visitors from Germany who are skittish about traveling to the once popular destinations of Turkey, northern Africa or elsewhere in Europe because of fears triggered by terrorist attacks in those areas. For, despite the terrorist attacks in the U.S. on Sept. 11, 2001, the United States is still regarded as a safe destination.

More Later

In the tour and travel industry, no one really has the final word on whether the outlook for Visit USA business from Germany is truly rosy or truly gloomy until travel arrangements have been booked. But we will have a better idea of what the travel trade in Germany believes it will be this month as the major and mid-sized tour operators have their year-end financial reviews with reporters and business analysts.

 

For Operators, German Travel to Turkey, North Africa, Dropped 40-60 Percent in Past Year

Midst the dire tone of the news coming from the German travel trade—a tone made all the more woeful at last week’s annual convention of the German Travel Association (DRV) in Berlin—came the news from one of the nation’s largest tour operators that it was actually increasing capacity for the USA in 2017. Stefanie Berk, managing director Thomas Cook Central Europe & East announced that, in its long-haul program for next summer, Cook has expanded its Neckermann Reisen portfolio in the USA by a third to 664 hotels. Long-haul prices will be generally stable, she added, in a report that was issued on the occasion of the close of the business year ending Oct. 31st.

About the only positive note in Berk’s report, the development seemed to underscore what some receptive tour operators in the USA have suggested to the Inbound Report for much of 2016. That is, while business volume in German outbound travel is down—primarily because Germans are skittish about visiting destinations, such as Turkey and northern Africa, that have experienced terrorist attacks—it has not suffered nearly so much with the USA, which is considered a luxury destination. And as a luxury destination, its price point is not a key consideration when searching for, or booking, a long-holiday.

(Keep in mind that most in the industry expects arrivals to the U.S. for 2016 to drop vs. 2015.  For Thomas Cook, 2016 has been a difficult year. Overall, it experienced a 4 percent drop in bookings, although customer numbers were up by 8 percent when excluding Turkey. The company said prices for Turkey will be 8 percent cheaper next summer.)

You can determine for yourself whether or not the price points for U.S. product in Neckermann’s online brochure qualify as luxury prices:

—https://www.neckermann-reisen.de/urlaub/usa/ (German)

—https://translate.google.com/translate?hl=en&sl=de&u=https://www.neckermann-reisen.de/&prev=search (English)

But, aside from the one high note regarding the USA, there was little to cheer delegates to DRV’s convention.  Some highlights the event, as reported by the German travel trade publication, FVW, follow:

—German tour operators as a whole suffered their first revenue declines for years after dramatic sales declines for Turkey, Egypt and Tunisia outweighed growth for other destinations and travel products.

—Tour operators saw their combined revenues drop by 4 percent to €26.3 billion ($29.3 billion) in the tourism year ending October 31, which is about €1 billion ($1.14 billion) less than last year, according to figures released by DRV.

—Travel agency sales dropped by 2-3 percent to about €23 billion ($25.6 billion), with lower leisure travel sales and stable business travel sales at about €7.4 billion ($8.2 billion).

—The main reason for the market downturn—the first since 2009 in the aftermath of the global economic recession—is that package holiday bookings for Turkey, Egypt and Tunisia dropped by between 40 percent and 60 percent.

—DRV president Norbert Fiebig, who is also CEO of DER Touristik, said there was clearly “a switch in the travel flows of German holidaymakers from East to West” this year, citing GfK market research figures. Even so, strong growth for the Western Mediterranean, long-haul destinations and cruises “could not offset the declines for Turkey, Egypt and Tunisia”.

—On the positive side, Spain, and especially the Balearics and Canaries, saw strong growth this year on already very high volumes. In addition, Portugal, Greece and Bulgaria generated double-digit growth in travel agency bookings this summer.

—Germany and neighboring countries were also popular as consumers switched to self-drive destinations. However, most of these trips are self-organized with direct accommodation bookings rather than booked as tour operator packages.

Addressing some 650 conference participants, Fiebig urged the travel industry to pay attention to the increase in self-drive holidays to overland destinations (such as Germany, Austria and Italy). “The more demand for overland destinations increases, the more this business will be lost for tour operators and travel agents.”

Fiebig also wondered aloud: “Will the trend to overland destinations disappear next year or the trend to self-organized holidays also extend to simple air-based package holidays?” In response, he said, the German travel industry needed to promote its services better for this market segment, especially the security of a tour operator package holiday.

 

Under the circumstances, DRV did not make any overall forecasts for 2017. It noted that winter 2016/17 sales are so far behind last year’s level but said it is too early to make any forecasts for summer 2017 due to very low booking volumes.

Meanwhile, in Hannover… We posed the question “Do you believe that the USA/North America might benefit from the decline in visits by German travelers to Turkey and North Africa?” to Timo Kohlenberg, president and CEO of Hannover-based America Unlimited. “I do,” he responded, explaining, “Usually, the traveler to Turkey is not a long-haul client, but with the massive amount of people who were traveling to Turkey, I think there might be a few shifts.” As for his own business prospects for 2017, Kohlenberg, said that they were “very promising,” adding, “We are up around 10 percent, year-to-date, for 2017.”

Perhaps one reason for the success of America Unlimited is a result of what Kohlenberg has called “stunt marketing.” Last week, he unveiled the latest example of this sort of promotion with this 10-story banner on the side of a mixed-use, office-retail-residential high rise building in Hannover.

 

Wobbly” is a word one does not often find on the business news websites to describe an economic situation or outlook, but it seems to fit when one contemplates or discusses the condition of the outbound tourism industry in Germany and, in particular, its Visit USA business.

On the one hand, it appears that there are some savvy marketers—both the international tour operators in Germany, as well as the receptive tour operators within the United States—who’ve managed to keep the inbound traffic from Germany coming at a healthy pace.

On the other hand are the numbers. For the whole of the German tourism industry—including those who market and serve travel by Germans taking their holidays within Europe and Germany itself—it has been a challenge to find product and destinations not tainted with the penumbra of terrorist attacks; the numbers are holding up vs. 2015. But for those who sell USA product, what numbers there are have been awful. The latest data from the U.S. National Travel and Tourism Office (NTTO) for April 2016—the latest month for which figures are available—indicate that arrivals to the U.S. from Germany in April were down 15 percent over 2015 and down 7 percent year-to-date (through April 2016) for the same period in 2015.

Now, for the first time since the wake of the 2008-09 economic recession, there are news reports of insolvency among German tour operators—though none involve any company that sells Visit USA product—that suggest that not all is well in the German travel industry. Following are narrative snapshots gleaned from various news sources, including the German travel trade publicans, FVW and Touristik Aktuell.

—Insolvency proceedings against the Berlin-based Asia specialist Suntrips will open on Oct. 31. Meanwhile, the dynamic packing provider LMX Touristik plans to take over parts of the insolvent specialist and to maintain the brand. LMX Touristik had taken a lot of the trips for already booked customers of Suntrips. Meanwhile, all journeys have been completed, according to Mario Krug, LMK’s managing director. Suntrips filed an application for insolvency August 5th.

—Angelika Vogel, CEO of Dusseldorf-based Ibero Tours, has written customers asking for asks for an understanding of the company’s situation and patience with outstanding funds. It is also “in the interest of the customers” that the company’s long-term efforts “reach a complete creditor satisfaction with the avoidance of the insolvency.” The company’s high level of debt led to travel cancellations, cancellations and unpaid hotels, news reports indicate.

Vogel said that Ibero Tours’ investors have assured the company “that no later than January 2017 sufficient capital will be available to compensate all liabilities of the company without any deduction.” Until then, she wrote customers, it is “unable to make binding payment promises,” adding,” I would be very much obliged if you would give us the time to be able to comply with all our obligations. According to the shareholders of our company, this is currently not possible.”

—Alltours, Germany’s fifth-largest tour operator, reported pre-tax profits of €52 million ($56.6 million) for the year ending October 2016 even though customer numbers are likely to fall by 241,000 to 1.63 million. The company said that it maintained its profits by sharply cutting back on full charter flights.

“Despite lower customer numbers, the Alltours Group is very satisfied with the financial results,” said managing director Markus Daldrup.

The decline in volume was largely due to an overall loss of 260,000 bookings for Turkey, Tunisia and Egypt. For the near-term, is targeting a 4.5 percent increase for both customer numbers and revenue in the 2016/17 year. Winter bookings are currently “going (according) to plan,” although demand for Turkey remains below last year.

—The Munich-based tour operator Studiosis—a large cultural holiday specialist which also operates the Marco Polo brand— increased its revenues this year by 2 percent to nearly €263 million ($286 million) but customer numbers fell to 100,150 from 103,509 in 2015.

Owner Peter-Mario Kubsch said he was very satisfied with these figures given the many crises and incidents around the world during the year. Destinations with strong growth this year included Japan (+40 percent), Cuba (+31 percent), Iceland (+21 percent) and Southern Africa (+18 percent) while the number of Russia bookings nearly doubled to 1,861 guests. In general, the tour operator saw a trend towards European and long-haul destinations.

Bookings of city trips declined by up to 60 percent following the terrorist attacks in Paris, Brussels and Nice. Even demand for Rome, which celebrated a Holy Year, remained well behind expectations. The company expects a similarly difficult year in 2017 with no significant improvement in demand. Tours for families, smaller cities and short trips will be expanded following good demand.

—The family owned tour operator Schauinsland-Reisen—it is headquartered in Duisburg, in the western part of Germany—reported that it had flat revenues and customer numbers this year, but still says that it increased its market share. Owner and managing director Gerald Kassner announced figures for revenues and customers in 2015/16, with turnover of €1.1 billion ($1.2 billion) and nearly 1.4 million guests, which showed little change from the previous year. Kassner admitted that the company’s profits have fallen this year, but he declined to indicate by how much.

He was nonetheless positive as the company presented of its summer 2017 program, however, saying, “We’re very happy that we can close this competitive, turbulent year without any drop in volumes or revenues. That means we are ahead of the market.”

Looking ahead, Kassner is cautiously optimistic for the forthcoming year. In 2016/17 as a whole, he is aiming to “increase customer numbers and turnover and achieve growth on a solid, healthy basis,” although he declined to make any precise forecasts “at this stage.”