Survival call

German tourism industry faces dramatic financial hit

German tourism chiefs already met government officials earlier this month.
German tourism chiefs already met government officials earlier this month.

The German travel and tourism industry is calling for an urgent government aid programme and state-backed ‘holiday vouchers’ to prevent a massive short-term €4.8 billion financial hit that could result in countless insolvencies within weeks.

Companies and organisations have sent about 130,000 e-mails and letters calling for a ‘protective shield’ and new legal conditions for cancellations to ministers, MPs and other political decision-makers. The mailing action was coordinated by the German Travel Industry Association (DRV).

The DRV estimates that German tour operators and travel agents are likely to suffer a revenue loss of more than €4.8 billion between mid-March and the end of April due to cancellation repayments and lost bookings. This figure does not include revenues already lost in February and early March as the corona crisis started to escalate and excludes any estimates about the situation from May onwards.  

The urgent appeal for state aid comes after some 10,000 travel agencies were forced to close because of the country’s anti-coronavirus shutdown. Many are trying to operate online but new bookings are virtually non-existent at present, meaning both travel agents and tour operators face another month with minimal revenues.

Many travel companies are now switching to short-time working (known as ‘Kurzarbeit’ in German), with the government paying part of employee salaries for several months in order to prevent layoffs. These include major travel agency chains DER (Deutsches Reisebüro) and Schmetterling, leading tour operators TUI and FTI, and diverse smaller companies. In the hard-hit aviation sector, Lufthansa and Fraport are taking similar measures.

“Our industry is particularly impacted, at the latest with the global travel warning and closure of travel agencies,” declared DRV president Norbert Fiebig. Some three million people are estimated to work in the German tourism sector as a whole.

He called on the German government, which is planning to spend tens of billions of euros supporting the country’s economy, to create a special fund to provide the industry with urgently needed cash. 

“A protective shield for the travel industry is now urgently needed. Otherwise we will not survive. It’s absolutely vital to maintain liquidity for tour operators and travel agents,” he warned. “It won’t work without cash payments.”

One short-term option would be to allow tour operators to give customers state-guaranteed vouchers for holidays at later dates instead of refunding them now for cancellations, Fiebig proposed. Similar schemes have already been introduced in the Netherlands, Belgium and Italy. At present, tour operators legally have to refund customers their advance payments for holidays that have been cancelled.

In parallel, tour operators are withdrawing commission payments to travel agents. This means that travel agents are not only lacking new bookings but face losing money they already received for bookings over the last few months.

The German government is now intensively reviewing whether to permit such holiday vouchers, according to Thomas Bareiß, state secretary in the economics ministry. The German justice ministry is in contact with the European Commission about the proposal.