As a Matter of Fact, the Outlook is Good: Just seven days after IPW in New Orleans and six days after the UK residents voted to have the country leave the European Union, a move that caused nearly every source of information on the travel and tourism industry to shudder in its news voice, FVW, the German travel trade publication headlined its news with “Good German sales despite strong dollar—German tour operators have generally good bookings for the USA this year despite the strong dollar and are aiming to keep prices stable for 2017.”
One major reason for the outlook is that the euro, while it is still substantially lower than the $1.40 to $1.45 level it was a little more than a year-and-a-half ago, has remained at about the same level for a year now—around $1.10 to $1.12. German tour operators have adjusted during the past year and, while sales have been sluggish at times, their adjustments have proved fruitful. For instance, FVW notes:
—Tui and FTI, two of the top five operators in German have experienced a single-digit rise in US sales, in revenue terms
—Specialists such as Canusa and America Unlimited have double-digit growth, mostly due to higher prices.
—Thomas Cook reported a “somewhat muted demand”
—Dertour, after a record 2015, has lower sales as a result of double-digit price increases.
— Operators are trying to offer more value for money, such as with hotel upgrades, as well as with dynamic pricing using renegotiated rates. Demand for advance bookings of excursions and restaurants is also good, according to Tui, as they enable good budget planning.
—Tour operators have also stepped up their marketing for US destinations and offers. New York, they note, is now cheaper than any time in the last five years thanks to low flight prices and thousands of new hotel rooms, according to FTI.
—Dertour pointed to an end to extreme price increases in Miami and San Francisco.
—For the future, tour operators in Germany are hopeful they can keep prices generally stable for 2017 after negotiating rates with suppliers at IPW.
The substance and tenor of what FVW reports echoed what Peter van Berkel, president of Miami-based receptive tour operator Travalco, for whom Germany is a major market, told the Inbound Report at IPW.
He suggested that, in essence, the playing field had leveled off this year. Last year, he said, there were some operators who had product they had contracted for when the euro was much stronger against the dollar. With a weakened euro, they were able to sustain sales last year by discounting their product (a practice employed by the largest German tour operators). Now, he explained, those inventories were sold off and all operators are working with a euro that has remained at about the same level for a year.
Van Berkel said that he is looking forward to doing well in the coming year.
REMINDER: With this issue, the Inbound Report will be published biweekly until after the USA’s Labor Day holiday (September 5, 2016), when we will resume publication on a weekly basis.