Solid growth

‘Good’ grade for summer 2015

The German travel industry has earned itself a ‘good’ grade this summer with solid growth despite countless problems, and can look ahead optimistically to next year, Paul Needham believes.

Normally school reports are handed out at the end of the academic year in July or August. In the tourism industry, you can start handing out provisional ‘grades’ in September once the main summer season is over. There are just a couple of months left in the ‘tourism year’ and it’s usually pretty clear how the year as a whole will end up.

As things stand now, the German travel industry can feel quite satisfied with 2015 in view of developments in the last few months. It has been a year of ups and downs that culminated in serious challenges during the summer months due to terrorist attacks and political conflicts. Yet business has remained robust without any slump in bookings. Germans have switched destinations but kept travelling.

Holiday sales fluctuated in the first half of 2015, with strong early bookings, a post-ITB drop and then an upturn in May and June. However, late bookings in July and early August were weaker than expected, probably mostly due to the surge in bookings after the FIFA World Championship last year and a heatwave in Germany this summer. Overall, summer 2015 package bookings were 7.5% higher as of end-July, according to market researchers GfK, while the German Travel Association (DRV) put growth at a ‘single-digit increase’. Experts believe the market is heading for growth of about 3-4% in 2014/15 as a whole.

This is definitely a solid achievement that tour operators and travel agents can be satisfied with, even if it is perhaps less than what some companies were hoping for in the spring.

This summer has been characterised by headline-making problems in major destinations. Demand for Tunisia has plummeted to a minimum following terrorist attacks while Turkey’s image has been impacted by the escalating conflict with the Kurdish PKK. Egypt has continued to make a comeback despite several attacks. Surprisingly, demand for Greece has proven remarkably stable despite the country’s political and economic turbulence, and the recent onrush of refugees. Spain has remained a pillar of stability in this otherwise changing picture.

The German travel industry has to be praised for responding quickly and flexibly to these various challenges. In particular, the reaction to the terrorist attack in Sousse, with widespread offers of free re-bookings to alternative destinations, stabilised what could have turned into an overall downturn.

So what about 2016? On the positive side, the German economy remains robust, with low unemployment and rising consumer spending, all pointing to solid demand for next year. But there are plenty of unknowns, particularly in terms of the situation in some major destinations. It would not be a surprise if Germans opt to play safe next year and head towards more stable destinations in greater numbers. Some tourist boards will therefore probably have to become more active in convincing consumers and travel agents as well that they remain a safe destination if they want to ensure growth on the German market next year.

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