As a Matter of Fact, the Outlook is Good: Just seven days after IPW in New Orleans and six days after the UK residents voted to have the country leave the European Union, a move that caused nearly every source of information on the travel and tourism industry to shudder in its news voice, FVW, the German travel trade publication headlined its news with “Good German sales despite strong dollar—German tour operators have generally good bookings for the USA this year despite the strong dollar and are aiming to keep prices stable for 2017.”

One major reason for the outlook is that the euro, while it is still substantially lower than the $1.40 to $1.45 level it was a little more than a year-and-a-half ago, has remained at about the same level for a year now—around $1.10 to $1.12. German tour operators have adjusted during the past year and, while sales have been sluggish at times, their adjustments have proved fruitful. For instance, FVW notes:

—Tui and FTI, two of the top five operators in German have experienced a single-digit rise in US sales, in revenue terms

—Specialists such as Canusa and America Unlimited have double-digit growth, mostly due to higher prices.

—Thomas Cook reported a “somewhat muted demand”

—Dertour, after a record 2015, has lower sales as a result of double-digit price increases.

— Operators are trying to offer more value for money, such as with hotel upgrades, as well as with dynamic pricing using renegotiated rates. Demand for advance bookings of excursions and restaurants is also good, according to Tui, as they enable good budget planning.

—Tour operators have also stepped up their marketing for US destinations and offers. New York, they note, is now cheaper than any time in the last five years thanks to low flight prices and thousands of new hotel rooms, according to FTI.

—Dertour pointed to an end to extreme price increases in Miami and San Francisco.

—For the future, tour operators in Germany are hopeful they can keep prices generally stable for 2017 after negotiating rates with suppliers at IPW.

The substance and tenor of what FVW reports echoed what Peter van Berkel, president of Miami-based receptive tour operator Travalco, for whom Germany is a major market, told the Inbound Report at IPW.

 

He suggested that, in essence, the playing field had leveled off this year. Last year, he said, there were some operators who had product they had contracted for when the euro was much stronger against the dollar. With a weakened euro, they were able to sustain sales last year by discounting their product (a practice employed by the largest German tour operators).  Now, he explained, those inventories were sold off and all operators are working with a euro that has remained at about the same level for a year.

Van Berkel said that he is looking forward to doing well in the coming year.

REMINDER: With this issue, the Inbound Report will be published biweekly until after the USA’s Labor Day holiday (September 5, 2016), when we will resume publication on a weekly basis.

 

—Just weeks after announcing that it was selling off some 50 specialty brands from its inventory, Tui,  reports the German trade publication FVW, is planning to increase its German travel agency network by about 100 locations in the next few years. It is also ready to acquire agencies whose owners are planning to retire. TUI’s existing 468 retail outlets are gradually being re-branded to “TUI,” with the TUI smile logo now appearing at 138 branches. Most of the remaining 330 outlets—they still operate under the “Hapag-Lloyd” or “First” brands—will be converted to the group brand. The move continues the strategic direction announced by the Tui travel group following its merger with its parent company, Tui AG in December 2014. Five months later, the company announced that all of its operations would be brought under a single Tui brand.

—Germany’s Axel Springer Group, the largest digital publishing houses in Europe, is planning to make an acquisition in the holiday accommodation market. Its @LeisureGroup subsidiary has made an offer to buy listed Danish company Land & Leisure, a Danish company that markets holiday homes under the Dancenter brand as well as leisure park accommodation through Danland. @LeisureGroup already has acceptances from the Danish company’s two main shareholders who jointly hold 64 percent of shares, said FVW. The acquisition of Land & Leisure, which expects revenues of up to €42 million ($47.7 million) this year, could cost up to €62 million ($70.4 million).

The @LeisureGroup offers more than 460,000 holiday properties in 36 countries, including more than 60,000 directly contracted by Traum-Ferienwohnungen, which it acquired in April, about 22,000 through Belvilla and others through booking platform Casamundo. It generates booking turnover of about €200 million ($227 million) a year from 1.3 million units in over 140 countries.

—Youth holidays specialist RUF Reisen, which is headquartered in Bielefeld, Germany, is taking over language holidays tour operator IP International Projects, which trades under the name Offaehrte. Bremen-based IP operates its own language schools in Germany, the UK and France. RUF Reisen said the acquisition, which follows a cooperation between the two companies, would broaden its product portfolio for 11-23 year-olds and also supports its internationalization. According to the latest annual market survey by the Association of German Language Holiday Tour Operators (Fachverband Deutscher Sprachreise-Veranstalter, or FDSV), English language tours are predominant among vacationers from Germany who take language tours.

 

In the wake of dismal sales reports through the first quarter of 2016 and the expressed belief by many in the travel and tourism industry in Germany, travel agents in Germany are less confident than they’ve been since the trough of the economic recession of 2008-09. According the German travel trade publication fvw and its “sales climate index,” the combination of declining sales in recent months, as well as

the uncertain outlook for the next few months have driven the monthly index for April down by 11.5 percentage points to 83 points. This is the lowest level since April 2009, and down 19 percent from April 2015 when the index was at 103 points.

Conducted in mid-April by consultants Dr Fried + Partner with a travel agency panel, the index is based on: (a) mix of current sales trends, and (b) the short-term outlook. Both figures dropped to 83 points for April. Some specific findings from the survey that generates the index:

—More than half of the survey respondents reported a drop in bookings in recent months

—More than one third described the sales situation as “bad.”

—Just 11 percent believed that demand will improve in the next few months, nearly half expected it to remain unchanged, and 40 percent predicted that demand would continue to fall.

—Only 5.6 percent of those responding predicted rising profits in the coming months while 42 percent expected them to continue falling.

 

Fortunately, for U.S. travel suppliers and receptive tour operators, the dreary outlook seems not to have seriously affected prospects for Visit USA business. Driven largely by concerns for safety in the wake  terrorist attacks in Turkey, northern Africa and the March 22 terrorist attack in nearby Brussels, most German travelers who have altered their travel plans seem to have chosen to take their holidays within Germany itself or elsewhere in Europe—essentially short-haul travel.

As some operators conveyed to the Inbound Report in early March following ITB in Berlin, the U.S. is largely perceived as a long-haul luxury destination, and one makes a decision to travel to the U.S. well in advance. Such a decision is not easily undone.

Also, even in the absence of the fear-of-terrorism factor, travel to the U.S. is projected to be flat or to register modest, single-digit year-on-year increases for the next five years. It is probable that a decline in visitation, year-to-year, would also be modest.