The month of March 2016 closed out with travel agents in a less-than-optimistic mood about the prospects for this year’s business activity. Two terrorist attacks during the three-month period have taken their toll on the psyche of Germans. The first took place on January 12th, in Istanbul when an ISIS-backed suicide bomber killed 10 people—eight of them Germans—and wounded 15 others, many of them German. Then came March 22, when there was a series of three terrorist bombings in Brussels, Belgium, just 140 miles from Cologne, that killed 32 people and injured more than 300.
As a result, the German travel trade publication FVW reported, holiday bookings still remain well behind their pace last year, even if demand had slightly strengthened in recent weeks, according to tour operators. Domestic holidays in Germany sold well but demand for Turkey, Egypt and Tunisia fell substantially.
Said FVW: “The terror attacks in Istanbul and Brussels have now further depressed the mood among German travel agents, according to the latest monthly confidence index by consultants Dr Fried + Partner for FVW. The index weakened to 95 points in March compared to a high 103.9 points in the same month last year.” From the survey that provides the index numbers:
—Only 26 percent of respondents said they had increased sales in recent months.
—Thirty-four percent reported a decline.
—One third said that their sales were rising at the time of the survey.
—Only 17 percent said they expected profits to improve in the next six months.
—Twenty-seven percent believed they will see lower sales and profits.
—A quarter (26 percent) of respondents predicted falling demand in the coming months vs. 23 percent who predicted an increase.
—More than half of respondents do not expect any change in demand.
The Long Term Outlook Also Uninspiring: In addition to the fragility of Germany as a source market for international travel due to economic and political crises as they occur, the German tour and travel industry—as does the whole of the Germany economy—faces a serious demographic problem. A study released last May said that Germany’s birth rate has slumped to the lowest in the world—lower than that of Japan.
According to Henning Voepel, director of the Hamburg Institute of International Economics, the nation’s falling birth rate means the percentage of people in the key travel demographic of 20 to 65 years old would drop from 61 percent to 54 percent by 2030. This is a concern, of course, for the German labor market: i.e., the prospect of fewer workers will mean higher wage costs and pose a challenge for the nation’s economic growth.