Cancelled bookings

Tour operators offer incentives for vouchers

"Guests want planning certainty," says FTI Group CEO Ralph Schiller.
Jan Greune
"Guests want planning certainty," says FTI Group CEO Ralph Schiller.

German tour operators are offering cash and other incentives to persuade customers to accept holiday vouchers for new bookings rather than repayments for cancelled bookings.

Tour operators in Germany have cancelled all bookings for holidays up to the end of April in response to the foreign ministry's global travel warning and worldwide travel restrictions.

Now it appears extremely unlikely that foreign package holidays can take place in May either and most tour operators are not obliging customers who have made advance payments to pay the final instalment. Moreover, prospects for the traditional summer holiday peak period from June to August are completely unpredictable at present.

Government approves vouchers instead of refund

In response, the government approved a plan for customers whose holidays have been cancelled due to the Covid-19 pandemic to be given a voucher to book a new holiday of the same value at any time over the next 21 months. If the customer does not use this voucher by December 31, 2021, then the tour operator is obliged to refund the customer's original payment.

The main advantage of the scheme for tour operators is that they can retain the first instalment for the cancelled booking in order to protect their revenues and cashflow. However, the scheme still needs clearance from the European Commission as it contradicts the legal obligation to refund payments for a cancelled holiday within 14 days of the cancellation.

Tour operators react differently

Leading travel companies in Germany have moved quickly over the last week in response to the voucher solution but are taking different sales & marketing approaches to the situation.

Market leader TUI is offering customers who accept a voucher up to €150 extra per booking. The value of the cancelled holiday will be increased by between €20 and €250, depending on its original price. The value of most holidays is likely to be raised by €150, according to the company.

In addition, customers who make new bookings by the end of June will benefit from the recently introduced 'TUI loyalty bonus' of up to €100 per person. TUI is already taking bookings for summer 2021.

"Our customers still want to travel, and we would like to reward all the holidaymakers with cancelled bookings when they decide on a new date and stay loyal to TUI," explained Germany sales & marketing director Hubert Kluske.

DER Touristik and FTI offering value on top

DER Touristik is giving customers a clear choice of getting their original payment back now or opting for a voucher. Those selecting the voucher option will be rewarded with an additional €50 on the value of their cancelled holiday. This can be seen as an "interest payment" to customers, according to Germany’s second-largest tour operator group.

FTI Group is trying to outscore its larger rivals by offering as much as €200 on top of the value of the customer’s payment. This so-called 'FTI Group Cash' would have to be used for services at the destination, such as excursions.

Sales & marketing chief Ralph Schiller explained: "We stand 100% behind the DRV proposals and have warmly welcomed the decisions of the German government. However, in the interests of our guests and partners as well as for legal reasons, we can no longer wait for a confirmation from the EU Commission. Our guests want planning certainty."

Alltours and Schauinsland refund all clients

In contrast, Germany’s other two major tour operators, both privately-owned, are taking a different path. Alltours, the fourth-largest tour operator, has already started to refund customers for all cancelled package and individual holidays that were scheduled for the period of March 17 – April 30.

Similarly, Schauinsland will refund all customer payments for holidays in March and April that have been cancelled. "We are working at top speed through the holidays that have been cancelled up to April 30, 2020 and will fully repay the holiday price to all these customers," the company declared.

Another tour operator taking this approach is Vtours, now owned by Switzerland’s Hotelplan Group. The company will fully refund all customer payments for holidays cancelled up to April 30. In addition, it will pay travel agents a special commission of €50 for all new bookings with a value of more than €1,000.