German consumers are still hesitating about booking their summer holidays and the tourism industry urgently needs to come up with a Plan B to save the season, Paul Needham believes.
The latest figures on sales trends in the German tourism market are disappointing to put it mildly. Travel agents suffered an overall 11% slump in holiday bookings last month, with summer sales down by 7%, according to the highly reliable monthly survey by market researchers GfK. Summer 2016 is now running 7% behind last year in revenue terms, with a dramatic 20% drop in bookings for August. These are appalling figures that will be hard to recover from.
The well-known destination trends also continued in March, judging by Traveltainment's figures for advance package holiday bookings to the leading holiday airports. Antalya, down by 50%, and Hurghada, with a 31% fall, both had another terrible month which continued the heavy falls seen in recent months. These figures suggest that post-ITB discounts and promotions for Turkey and Egypt did not make much of an impact in terms of stimulating demand and overcoming consumer concerns.
Once again, bookings for the Canary Islands, Majorca, Crete and Bulgaria rose strongly last month, showing that they are still profiting as consumers switch from the eastern Mediterranean and North Africa. But this high growth surely cannot continue indefinitely as capacity will start to run out in the major resorts before too long.
So the key questions remain: what should tour operators and travel agents be doing to boost their business? Will it be enough to slash prices for Turkey, Egypt and Tunisia dramatically and hope that consumers ignore their security concerns and opt for cheap late bargain deals for these three destinations? This will definitely be a challenge, judging by diverse surveys showing that safety and security will be a vital factor when consumers - finally - book their summer holiday. Moreover, there appears to be little sign of an industry-wide initiative to reassure customers about security in troubled destinations.
More than ever, the tourism industry is challenged to offer a wide range of attractive alternative holidays. Even if capacity gets tight in the traditional destinations in the Western Mediterranean, there are still plenty of other short-haul beach holiday destinations. The Spanish mainland, France and Italy, the Adriatic coastline of Croatia and Montenegro, and, perhaps most notably, the Greek islands come to mind. There is also potential for holidays closer to home on the North Sea and Baltic Sea coastlines, where perhaps Belgium, the Netherlands, Denmark and Poland can seize the chance to win more German holidaymakers.
In other words, Plan B for summer 2016 could be summed up as 'destination diversification' with stronger efforts to spread customers across a wider range of destinations while at the same time trying to maintain a reasonable number of bookings for Turkey and Egypt. Creative sales & marketing will certainly be needed in the weeks ahead.