This week, we take a look at what our colleagues at the authoritative German travel trade publication, FVW, have to say. In the most recent issue of the INBOUND report, we discussed the 2019 outlook for the German market, along with an assessment of the country’s expected performance as a source market for the U.S. in the current year—from the perspective of two major German tour operators: FTI and America Unlimited. While both anticipated just fair results for 2018 and next year, neither anticipated any fall-off, which is good news, considering the fact that Germany is the fourth largest overseas source market for inbound travel to the U.S., behind only the UK, Japan and China.

One factor influencing the long-term forecast for visitors from Germany to the USA is a fundamental one: the number of Germans has remained the same for some time. It’s population in 2018 isn’t much different than what it was 10 years ago, which means that, as the population ages, the size of the ideal travel market segments—25 to 54 years old—is getting smaller.

The major reason for the static population is that the country’s birth rate is lower than the average for European countries, although it has ticked up a bit recently due to an increase in the number of non-German born women giving birth. Even with a higher birth rate, it will take years for such a number to be a factor in near-term growth of Germany’s outbound, long-haul travel market. Following are segments from what FVW has to say in its recent Destination Ranking 2018 as it relates to North America.

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The USA is way ahead of all other destinations in North and South America despite stagnating German visitor numbers last year. Canada grew well and Brazil was also more popular. The graphic shows total German visitor numbers last year and percentage changes compared to 2016. The German market appears relatively stable. Based on the figures up to August, a slight drop to about two million guests appears likely for 2017. (The official figure put out by the U.S. National Travel and Tourism Offices is 2,080,425.) This would still be the fourth-best result ever, though.

 Slowdown in slump of German visitor numbers to the USA: To recall: after the attacks of September 11, 2001, and the economic and financial crises, it took more than a decade to beat the former records from the end of 1990s. In 2014, the two million visitor barrier was broken for the first time; and in 2015 a new record was set with nearly 2.3 million German visitors. Under the effects of the weak euro, which made travel spending in the USA significantly more expensive, there was even a double-digit (-10.4 per cent) fall in 2016. With only a slight decline in 2017, an end of the downturn therefore looks in sight. In addition, the exchange rate situation has calmed down. In the first quarter, the euro has risen significantly to over $1.20. This will also have an effect on tour operator package prices in the medium-term. They are relatively relaxed about the situation and expect for 2018 at least a stable year for the USA.

In comparison with other source markets, Germany – which, by the way, has the highest proportion of business travelers among visitor numbers at 24 per cent – has performed relatively well. Among the top ten source markets for the USA, only Canada, South Korea and France have reported growth; all others are showing declines, and quite substantial in some cases. Overall, the USA is therefore likely to close 2017 with another decline, after the slight fall in the previous year, and drop significantly below the level of 75 million visitors.

Foreign visitors spend four times more than domestic travelers: High-volume cities such as New York and Los Angeles have reported record figures despite the weaker foreign visitor numbers. But Chris Heywood, from the marketing organization NYC & Co, points out that on average a foreign tourist spends four times more than a domestic traveler.

The consequences of the downturn are serious. In the USA as a whole, tourism industry revenues declined by as much as 3.3 per cent to $4.6 billion up to the end of November. “If as a country we want to even out the trade deficit with abroad, then we need foreign tourists,” emphasizes US Travel CEO Roger Dow. At present, the US travel industry is setting up a lobby group that would press the government to support incoming tourism more.

Canada continues its upswing in its anniversary year: While the interest of Germans in the USA is stagnating at present, Canada has been shining with unbroken growth for years. In 2013 a total of 311,000 German guests were counted in the country. In 2017 it was already about 389,000. This was growth of 25 per cent. However, in contrast to the USA, the maple-tree country still remains well below the previous record of more than 450,000 German visitors in 1996.

In 2017, the increase compared to the previous 12 months lay at 5.4 per cent. Canada benefitted from several aces during the year. The 150th anniversary of the country’s foundation generated media coverage with countless events and presented all visitors with free entry to the national parks. The low Canadian dollar and moderate flight prices thanks to a substantial rise in capacity compensated for the former price disadvantage compared to the USA.

And in contrast to its large neighbor, Canada’s government under the young charismatic prime minister Justin Trudeau scored sympathy points around the world. The total number of international visitors also rose by more than four per cent to 20.8 million arrivals in 2017. “We have a strong tailwind,” says a delighted David Goldstein, head of Destination Canada, “and we are profiting from the positive image that the international travelling public has of our country.”

Lengthening the season and promoting lesser-known regions: For Canada’s tourism officials, this upturn is far from over. For Germany, Destination Canada has set the ambitious target of half a million guests in 2020. This would be annual growth of more than 8 per cent. This is no easy task for the local Destination Canada team under the new management of Barbara Ackermann, who in the spring replaces Germany chief Karl-Heinz Limberg, who has served in the post for over 25 years.

A lot will depend on whether Canada can succeed in finding solutions for the already emerging bottlenecks in hotspots such as Vancouver, Banff and Jasper. These popular destinations offer hardly any scope for expanding capacity. Therefore, it is more a question of extending the relatively short season. Hoteliers, attractions and other suppliers will have to work together and keep their businesses open longer in the spring and autumn. The fleets of the motorhome rental companies also quickly reach their limits in the main season. Whoever wants to secure a vehicle is well-advised to book early.

Apart from lengthening the season, Destination Canada is also promoting regions that are visited less often. They are convinced that the Atlantic and prairie provinces offer plenty of potential. The next challenge will be to get holidaymakers away from the prejudice of ‘Canada = cold’ and to excite them for the off-season and niche destinations. The digital marketing strategy started in 2015 is designed to achieve this. It is not uncontroversial among tour operators but appears to be working so far.”

 

A REMINDER: The INBOUND Report will not publish next week due to the Thanksgiving Holiday in the U.S. It will resume publishing the following week, with the Nov. 29, 2018 issue.