Better than any assessment that the INBOUND Report could offer regarding the state of the travel and tourism industry in Germany is this past month’s travel agency index put out by the Munich-based business consulting firm, Dr. Fried & Partner. It showed the index at a near all-time low of 66.2, which is lower than it was in August. No agent surveyed described their status as “good,” while the percentage of “bad” responses had risen to 97.2 percent from last month’s 93.2 percent. The number of travel agents who, compared to last year, had sales of travel services that had fallen significantly in the last 2-3 months, totaled 96.5 percent of travel agencies indicating such; this was even more than in August when 94.8 percent indicated a decline of sales compared to 2019.
One has to rely on figures involving travel agencies, rather than those concerning tour operators, because the travel trade and leading tour operators have already conceded, it seems, that 2020 is a lost year for their business.
More than any other European market, Germany has suffered the full force of the impact of the coronavirus-driven global pandemic—from the shutdown of all borders in the EU till July 1st, followed by selective bans on varied countries since that time. The latter have hurt those agencies and operators who feature packages to favored destinations throughout the continent.
Airline Lift Capacity is Nil: Because long-haul air traffic has been effectively non-existent for six months, there has been no promotion of international travel or Visit USA product. And a return to pre-coronavirus traffic levels are not expected to return for several years. The situation is particularly dicey for Germany, whose de facto national carrier, Lufthansa—it is the largest German airline which, when combined with its subsidiaries, is the second largest airline in Europe in terms of passengers carried—has been teetering near total collapse.
The carrier recently announced a third round of job cuts on top of 22,000 announced since the start of the coronavirus crisis. Lufthansa, which received a government bailout of €9 billion ($10.5 billion) in June, said it would have to realize €1.1 billion ($1.3 billion) in impairment over its fleet decisions.
Usually, if one is looking for an answer as to where the industry is going, one looks at what the major operators are doing. And there, the situation is hardly encouraging. For instance, after earlier announcing its intention to try to move some 2020-21 product in the last quarter of 2020, TUI—the largest tour operator in Germany, Europe and the world—announced that it is reducing capacities in winter to around 40 percent of the original offer. (The TUI Group announced this in advance of the publication of the full-year results.) This action followed a decline of 83 percent in bookings this past summer. For the coming summer 2021, TUI plans to offer 80 percent of the originally planned capacity.
Meanwhile, Ingo Burmester, CEO Central Europe for DER Touristik, the number two market leader in German, said that he expects lower prices for destinations with weaker demand. “We will pass this on to our customers,” he said. DER Touristik is now accepting bookings for all of its 84 own-brand hotels as well as many other hotels for summer 2021, enabling families to make very early bookings for school summer holiday dates at discounted prices.
There seems to be a consensus in the industry that next year—for those who make it there—will bring about stable, if not cheaper, prices for the inventory that is/will be available.