The stable, slow-to-change tour and travel market in Germany last experienced a shakeup in the wholesale side of the distribution system earlier this decade, reaching its apogee in December of 2014 when TUI Travel merged with its parent company, TUI AG, to create the TUI Group. While there were some acquisitions and mergers after that, the industry has been relative quiet, except for the June 2015 of Kuoni’s tour operator business by DER Touristik’s parent company, the REWE Group. The latter is known primarily as the owner of thousands of supermarkets, operating under different brands, throughout Europe.
But now, according to a leading industry analyst in Germany, the country’s tour operator market is ripe for the next round of consolidation. This was the outlook projected by Dr. Markus Heller, managing director of market researchers Dr. Fried + Partner, who told delegates to last week’s FVW Congress in Cologne that the next episode of consolidation would be due to increasing financial pressures in the industry.
Heller said that technology-driven price transparency is putting extreme pressure on the package holiday margins of traditional tour operators. Also, tour operators, especially the country’s top three—TUI, DER Touristik and Thomas Cook—are growing less than the overall tourism market, which is being driven by online sales, he pointed out in a presentation of an exclusive study based on interviews with 20 German travel industry executives.
The playout of this situation is obvious, he said: “In the coming months we will see strategic investments by large tour operators who take over smaller ones.” he predicted.
The outlook is different, though, for the travel agency market which, Heller suggested, is unlikely to see major changes in the coming years as long as the sector retains its legal status as sales agents, However, tour operators will try to steer travel agency sales more than in the past, he forecast.
The most significant structural change, Heller noted, will come from consolidation of the online travel market. Google, her predicted, will start to play a more prominent role by placing itself more and more at the front of the booking process for flights and hotels, he predicted.
At the same time, Booking.com could create a ‘travel ecosystem’ by linking its various acquisitions, including flight metasearcher Kayak and restaurant portal OpenTable to its core accommodation booking portal, Heller suggested, which turn the Booking group into “the Amazon of travel” in future.
Note: Heller based his presentation on interviews with more than 20 leading tour and travel industry executives.