Recovery is a long time coming: Tourism has had a real horror year

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The pandemic is shaking tourism to the core. Since most trips have been canceled or canceled, companies have to refund a lot of money. That puts pressure on liquidity. Not only small travel agencies are facing the end, the industry leader is also in difficulties. Improvement is not in sight.

Bargain pleasure instead of corona frustration? After the crisis year 2020, tour operators are using early booking discounts to attract customers. But they are still hesitant to book for the best weeks of the year – the uncertainty is too great. People do not forego travel because they don’t want to, “but because they can’t,” says industry expert Martin Lohmann.

 

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“The demand is potentially there.” So far there are indications that destinations in Germany and neighboring countries that can be reached by car, bus or train are primarily in demand. In some places it could even be tight. “We are seeing high demand for earthbound trips in the summer. It is possible that not everyone will get their dream hotel if they book later,” reports Ingo Burmester, Head of Central Europe at DER Touristik.

Tui
Tui 4,74

Industry leader Tui points out that “not all of the volume that would otherwise have gone abroad can be absorbed here in Germany”. In the pre-crisis year 2019, according to the travel association DRV, almost 74 percent of holiday trips were abroad. The problem: “Constant changes to the entry modalities and travel warnings are still causing a reluctance to book,” says FTI Group Managing Director Ralph Schiller. After all: “Since the news was announced that there will be a vaccine against the coronavirus this winter, the booking inquiries have increased significantly. This shows us that people definitely want to travel again.”

The zigzag course unsettles vacationers

Andreas Rüttgers, Head of Air Tourism at Schauinsland-Reisen, also says: “The bookings are made much more quickly.” Customers disproportionately often opted for holiday resorts in direct beach and sea locations. In order to stimulate the desire to travel among German citizens, organizers lure with low-priced early bird discounts, the possibility of free cancellations and rebookings as well as hygiene concepts for travel and accommodation. Because the Corona crisis year has torn deep holes in the balance sheets that need to be stuffed.

According to DRV calculations, the loss of sales by German tour operators and travel agencies by the end of this year will total 28 billion euros – a one-time drop of around 80 percent compared to the previous year. Industry leader Tui and the third largest organizer FTI needed help from the state economic stabilization fund. At the Tui Group, the support – including private capital injections by the owners – now adds up to almost 5 billion euros. CEO Fritz Joussen hopes that business will be stronger again from the summer: “People just say: We’re sick of it, we want to go on vacation.”

Ultimately, any recovery in the industry depends on factors that it cannot influence. Politicians are required to deal sensitively with travel warnings and travel advice, warns the president of the DRV travel association, Norbert Fiebig. “A zigzag course, as seen in the current year, not only unsettles those willing to take a vacation, but also companies and stifles the existing desire to travel in the bud.”

Around 11,000 travel agencies at risk

Tui, too, would like more conclusive information – regionally, more precisely, if possible, not across the board for entire countries. Even if business picks up after the restrictions have ended, Fiebig believes it will take another year or two to hit pre-crisis levels. In his opinion, the package tour has a particular advantage, “as it offers holidaymakers additional security, especially in uncertain times”.

Travel agencies would also benefit due to the increased need for advice of customers in Corona times. But a lot also works digitally. For 2021, travel agencies and tour operators are cautiously optimistic: “Hopefully 50 to 60 percent of the sales of the record year 2019 will be there,” says Fiebig. The prerequisites are the availability of a vaccine and a risk-based testing strategy by the government. However, hardly all organizers and offices are likely to survive the shock.

If the restrictions remain until spring, “in some cases the state support will not be sufficient because the running costs without a business are too high in the long run,” fears tourism expert Torsten Kirstges. The professor at Jade University in Wilhelmshaven estimates that around ten percent of the around 11,000 travel agencies and around 50 to 100 tour operators in Germany could be at risk.

Unbroken desire to travel

According to the research community for vacation and travel (FUR), the desire to travel has been largely constant in Germany for years. Nothing fundamentally changed in the pandemic, explains Lohmann, head of the Institute for Tourism Research in Northern Europe (NIT) and scientific advisor to the FUR.

“The products of the travel industry don’t need a revolution.” According to Kirstges, this also applies to cruises, which were an important growth driver but have been criticized by environmentalists. “Cruises will boom again.” In principle, the expert does not consider the business model to be threatened. However, FTI discontinued the business operations of the tour operator FTI Cruises on October 31.

Tui, on the other hand, expects “that we will be able to start business again next year and have the entire fleet in circulation”. And when the longed-for recovery comes? “Then business has to be ramped up again quickly,” says Kirstges. “The loss of qualified employees – be it because they were laid off or because they were looking for a new job – could then put some strain on the industry.”

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