New Landscape Report GERMANY - Travel South USA
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EXECUTIVE SUMMARY In fall 2020, Lieb Management was commissioned by Travel South USA to compile a New Landscape Report, to describe the current state of the Tourism Industry in the German speaking markets, note important changes due to the Covid-19 pandemic and point out future trends relevant for travel to the United States and specifically the Southern region. A challenging task in those quickly changing Corona-times, indeed. But after a second wave of infections since November 2020, now extensive vaccination campaigns have been launched in German speaking Europe and the US - and this fact, together with the findings of this study, actually allow us to look positively into the future. The United States have been the most popular long-haul destination for our markets before the Covid-19 pandemic and signs are many, that this fact will not change: Germans, Austrian and Swiss remain a target group that travels more often, stays longer and spends more. Our economies are all in a relatively healthy position and go into 2021 confidently. The governments support people and businesses in a way never seen before. Travel and Tourism were the first sectors forced to shut down and will be the last to recover. The individual players are hit hard, but “are still standing”: The large wholesalers are re-structuring, the smaller specialists despite reducing staff, are partly finding new ways to survive and use the time to re-position and invest in digital resources. All receive financial support by the government, the effective tool of “short-time-work” helps to keep bright minds and knowledge in the companies. Destination webinars and agent trainings saw and still see immense popularity. No one is cutting product and hidden-gems in the Southern US-States and less-travelled routes might actually benefit in the end. Travel to the US will continue to be booked with travel agents and tour operators, millions of “successful” cancellations have shown customers the benefits of these channels. Although flexibility in booking procedures, sustainability, safety and hygiene concepts in a destination as well as outdoor experiences massively gain importance, assets like authenticity, hospitality and a good value for price, will stay key for success. Personal trade meetings and travel shows remain important and cannot replace purely digital happenings. The media and especially travel publications have seen a huge slump in advertising revenues, forcing many to pause issues, lay off staff and some to give up. Others re-invented themselves, expanded their digital offers and came up with new, creative concepts to reach consumers. Readers surprisingly trust more than ever in traditional journalism may it be newspapers or magazines, TV or radio, but the pandemic also increased their willingness to pay for digital offers and got them interested in new forms of communications like podcasts. Social media on the other hand is stagnating and use compared to other countries is still relatively low. For the United States having been the most popular long-haul subject for travel editors before Covid-19, recovery will be steady and all signs point to a very strong demand for US-content in 2021, once travelling will be possible again. Lieb Management | Travel South USA 2
EXECUTIVE SUMMARY The desire to travel is unbroken in the German speaking markets and a large backdrop of long- haul travel dreams being thawed in 2020 will result in even higher interest in the years to come. Consumers in Germany however should not be put in tight measures of demographics, in particular the numerous US-fans scattered throughout all age groups, and a themed approach seems more promising. Especially because the advantages of the Southern-US states, such as magnificent nature, authentic experiences, exciting culture and history and delicious food, match so well with the general preferences our consumers have and are looking for in a vacation destination. One insight that we encountered again and again in all areas of this study was how important a continuous presence in the market is: How much it is appreciated by tour operators and the media in these times of crisis when a destination remains present. All states with own representation on the German market, which are members of the Travel South association, are still active, maybe with reduced budget, but they still “fly the flag”. This strengthens the ties and will pay off in the future for sure, also for the region as such. Investments in our markets will continue to be worthwhile in the future and we look forward to supporting Travel South USA with our expertise wherever possible. With this in mind, we thank Travel South USA for their trust and reiterate our confidence that the overall situation will improve soon. Political decisions to lift travel restrictions will obviously play a role, but the recently launched vaccination campaigns on both sides of the pond make the light at the end of the tunnel shine ever stronger. Thank you! Your Lieb Management Team Munich, January 15, 2021 Lieb Management | Travel South USA 3
Overview 05 SWOT Analysis 06 Factors Affecting Travel 17 Travel Industry Landscape 42 Media Landscape 60 Social Media & Influencers
SWOT ANALYSIS – SOUTHERN STATES USA STRENGTHS WEAKNESSES ✓ Great combination of history, culture ✓ Too much variety in travel themes – selling and nature point “South” doesn’t fit for all states as the ✓ Good accessibility with various direct differences between states are significant flights ✓ Limited travel season / travel season vary ✓ USPs with wide known attributes such throughout the states as Southern music, food and hospitality ✓ Long distances to cover everything – the ✓ Lots of variety in travel themes/routes region has the size of Europe ✓ Excellent value for money – less ✓ Some states and states are world-renowned, expensive than other US areas others almost unknown to Germans ✓ Many of the Southern states don’t have much product in TOs portfolio ✓ Infrastructure for trains and RV travel expandable SWOT ANALYSIS Southern States USA OPPORTUNITIES THREATS ✓ Create new product with TOs ✓ Political situations / BLM protests ✓ Hidden-jewel stories are assets for ✓ Covid-19 media ✓ Competitor states / regions ✓ Visitors can easily avoid mass-tourism ✓ Airlines might cut their connections to just post Corona established destinations; will it be logistically ✓ Develop more infrastructure for RV possible to trips with different inbound/ travel, which will be in high demand outbound? post Corona ✓ Other regions have better infrastructure for ✓ Visitors can easily avoid mass-tourism most likely growing popular RV travel post Corona ✓ Hurricanes might discourage to travel to ✓ Interesting for USA-lovers/repeaters southern states Lieb Management | Travel South USA 5
OVERVIEW ECONOMY AND FORECAST 2021 Germany Th e coronavirus pandemic has led Germany’s economy – like the global economy – into a recession. However, the 2020 interim projection, which was published in early September by the Federal Ministry for Economic Affairs and Energy, shows that the worst fears have not materialized and that the economy is recovering faster than expected. The recession in Germany has already bottomed out. The economic recovery process has been continuing, but the pandemic situation poses a risk. Following a historic 9.8 percent drop in GDP in Q2, the German economy experienced a palpable recovery in Q3, growing by 8.5 percent. This allowed economic output to reach approx. 96 percent of the level posted in Q4 2019, before the outbreak of the pandemic. Gainful activity and employment subject to social security contributions grew, whereas unemployment decreased markedly in November. Looking forward, however, the outlook is less bright. The ifo business climate softened in November and is now slightly negative, overall. The balance was tipped by the business expectations, which, like export expectations, are now considerably gloomier. The partial lockdown in force since the beginning of November and the additional measures adopted with a view to limiting social contacts mainly hit the hospitality sector and business in the fields of leisure and tourism. Now that a hard lockdown has been put in place, other sectors are also affected. The cautious export expectations chiefly reflect the force of the second pandemic wave that has hit a number of European countries. Altogether, it is likely that economic growth in Germany in Q4 will be much dampened (source www.bmwi.de) Lieb Management | Travel South USA 7
OVERVIEW ECONOMY AND FORECAST 2021 Germany Th e German Council of Economic Experts (GCEE) forecasts the real gross domestic product (GDP) to decline by 6.5 percent in 2020 (6.9 percent calendar-adjusted). For 2021, it expects positive growth rates of 4.9 percent (also 4.9 percent calendar-adjusted). Consequently, GDP is unlikely to return to its pre-pandemic level before 2022. The unemployment rate will continue to rise in the coming months and will only start to decline in the course of 2021. (source: www.sachverstaendigenrat-wirtschaft.de) Th e travel industry is not expected to return to normalcy before 2023: The Statista Mobility Market Outlook estimates the turnover of the German travel industry at around 26 billion euros last year - that is 56 percent less than in 2019. Corona hit the cruise industry and package tour providers the hardest. For the current year, the analysts still expect a third less turnover compared to the pre-crisis level. It is only for 2023 that the forecast assumes a more or less normal travel and tourism turnover again (source: statista.com) Pauschalurlaub = package Figures in billions of euros. tours (Source: statista.com) Hotels = Hotels Wohnungen = Apartments Kreuzfahrten = Cruises Lieb Management | Travel South USA 8
OVERVIEW ECONOMY AND FORECAST 2021 SWITZERLAND & AUSTRIA Switzerland A fter a decline of 1.7 percent in the first quarter and 7 percent in the second quarter, the Swiss GDP grew by 7.2 percent QoQ in the third, thanks to the lifting of restrictions put in place to combat the coronavirus pandemic. This is better than the consensus expectation. At the end of the third quarter, Swiss GDP was 2 percent below its pre-crisis level. The strong rise in GDP is mainly due to household spending, which increased by 11.9 percent over one quarter to reach 98.6 percent of its pre-crisis level. Investment in capital goods (+8.8 percent QoQ) and construction (+5.1 percent QoQ) also rebounded strongly. Construction even moved above its pre-crisis level. Strong domestic demand allowed imports of goods and services to rebound strongly (+11.2 and +9.9 percent QoQ, respectively). However, exports did not rebound as strongly. While exports of non-valuable goods rose by 6.9 percent in one quarter, exports of services increased by only 1.4 percent. This is due to the much lower number of foreign tourists visiting Switzerland this summer than in other years. All in all, a slightly negative quarterly growth in the fourth quarter of 2020 is expected. For 2020 as a whole, a contraction of 3.2 percent of GDP is expected. The recovery in 2021 should be solid, mainly in the second half of the year once the Covid vaccine eliminates any risk of a third wave of the pandemic. According to forecasts, a growth of 3.1 percent for the year 2021 as a whole is expected (source: https://think.ing.com) Austria Th e economy should have emerged from recession in the third quarter. Industrial output growth accelerated in July–August—despite dipping in August—while manufacturing operating conditions improved markedly in the quarter as a whole. Moreover, business confidence—despite remaining in pessimistic territory—rose strongly in the quarter, while consumer confidence turned less sour in the same period, boding well for household spending. Looking at Q4, economic activity will likely be dented by new restrictive measures announced in mid-October amid a surge in new coronavirus cases. Meanwhile, on 14 October, the government tabled the 2021 draft budget, which will see greater spending on climate issues, despite a projected fiscal deficit of 6.3 percent of GDP due to the fallout from the pandemic. However, the budget does not include promised tax reform measures. After a record hit to GDP this year, the economy is forecasted to recover notably in 2021 as domestic and external demand strengthen. FocusEconomics panelists forecast a GDP growth of 4.7 percent in 2021, which is down 0.1 percentage points from last month, and 3.0 percent in 2022 (source: www.focus-economics.com) Lieb Management | Travel South USA 9
GLOBAL INDUSTRY TRENDS What is Being Booked W ith hardly any destinations open for tourists at present, prospects for next year remain unpredictable. Sales revenues for winter 2020/21 (running until next April) are down by more than 70 percent at present, the TDA figures showed. However, the DRV optimistically referred to “the first slight signs of hope” for summer 2021 following news that COVID-19 vaccines will start to become available in the coming months. DRV president Norbert Fiebig said: “We also expect a catch-up effect as lots of people weren’t able to go on holiday this year and postponed it until 2021.” Advance bookings for next summer are showing higher demand for the western Mediterranean as well as for long-haul destinations, he pointed out. But the association accepts it will take time before the German travel industry can hope to get back to the record levels of 2019. “For 2021, we are cautiously optimistic that about 50-60 percent of the previous revenue levels of about €36 billion for the organized travel market can be achieved,” Fiebig said (source www.fvw.com) M any tour operators stated that bookings are coming in, also to the US, due to the relaxed cancellation conditions all tour operators are offering. However, it is very uncertain whether these trips are feasible. Many Germans plan for this year rather vacation in Germany or in nearby European countries, as long as it is not clear which countries can be traveled Example for marketing activities in market: G ermany and the UK are the two pilot markets in which Destination Canada is boosting inbound travel for 2021. Together with specialist tour operators, the marketing organization is targeting people interested in Canada and customers whose planned or already booked trip could not take place in 2020. The interest in Canada travel in 2021 is big, as tour operators unanimously confirm. Destination Canada has therefore already launched the first end- customer advertising in the two pilot markets of UK and Germany. In the fourth quarter of 2020, extensive cross-channel campaigns were set up with the key accounts America Unlimited, CANUSA Touristik, CRD Touristik and SK Touristik Lieb Management | Travel South USA 10
VIEWS ON TRAVEL TO THE US Many US-specialist tour operators in the German speaking market informed us, that their clients are very interested in travelling to the US again: Especially regular customers can’t wait for the travel ban to be lifted and would travel rather sooner than later, despite any possible Covid-19 restrictions. Tour operators see recent developments regarding the elections and a new administration as additional positive signs. It is not yet determined if the events of January 6 have any impact on the views of the German speaking clients and might affect travel plans. Experiences in the past show, that political events in a destination do not influence the intention to travel for longer. The memory of travelers is very short if the attractiveness of the destination does not change in general, whether it is a natural disaster or political unrest. The best examples are Turkey, Egypt, Thailand and Sri Lanka. Twice in 2020, IPK International conducted a special survey on international travel behavior in times of the Corona pandemic with the participation of ITB Berlin. Based on population-representative surveys, this study examines the influence and impact of the Covid-19 pandemic on international travel behavior in Germany and in a further 17 markets worldwide. With regard to the German market it comes to interesting results: A round a third of the Germans surveyed, went abroad in the summer months from June to August 2020 despite Corona. This puts the Germans well above the European average of 22 percent and the global average of 19 percent Th e aspect of “traveling cheaper in Corona times” is not an option for the vast majority of respondents. This makes it clear that the pandemic has so far at least not had a negative impact on the travel budget Lieb Management | Travel South USA 11
VIEWS ON TRAVEL TO THE US A round 60 percent traveled to a neighboring country, so the car was by far the most popular means of transport with 63 percent - followed by the airplane with 25 percent and the train with 12 percent. When asked about their experience of traveling abroad in times of Corona, 66 percent of Germans said that it was “better than expected” Th e intention of Germans to travel abroad in the next twelve months has risen again in November compared with the June survey, at six percent, and is once again well above the European and global average. Many of those who still stated in June that traveling abroad was out of the question, are gradually returning to the circle of those willing to travel In addition to Germans, the Swiss, Dutch and Austrians in particular are also showing above-average interest in traveling abroad in the next twelve months Conclusion: With vaccination campaigns well underway in the German- speaking countries and the United States, a significant backlog of demand for vacations in the U.S. and high interest among US specialists, and a generally high propensity to travel in market, we are looking confidently to 2021 and beyond. Taking into account that the United States has been the most popular long-haul destination for Germans and that this has not changed (see Consumer Sentiment page 76), we expect a slow, but steady recovery. Even though the view of vacations in the United States may have been dampened at the moment, long-term negative consequences are not to be expected. We expect the new administration to have a positive external impact and also to attract new first-time visitors. Lieb Management | Travel South USA 12
STATE OF LONG-HAUL OVERSEAS FLIGHTS Due to the travel ban issued by the US government in March 2020 and the Covid-19 restrictions on the German side, air travel has diminished massivly. Germany Th e US airline Delta cut their additional German connections during summer season from Stuttgart, Munich, Dusseldorf and Berlin. So far there is no news on when they can be re-established A irlines like Condor and Eurowings previously offering connections to secondary airports important for the Southern USA, like New Orleans were cut. A merican Airlines shrinked their flight offers and the important Charlotte, NC flight was suspended L ufthansa temporarily suspended numerous long-haul routes from its Munich hub during the winter 2020/21 season. Flights to Washington DC will no longer be operated. Flights to San Francisco, Tokyo and Beijing have also been temporarily suspended, but are scheduled to resume from the beginning of March 2021 Th e main connections from Germany to the United States by Lufthansa, Delta, United and American Airlines are operating, but partly with less frequency N on-stop flights from Germany to the Southern States (Please see next slide for an extended overview) Delta Air Lines: Frankfurt – Atlanta Lufthansa: Frankfurt – Washington D.C. United Airlines: Munich – Washington D.C Austria and Switzerland A ustria’s direct connections to Washington D.C. were reduced. For Switzerland, the Delta connection Zurich-Atlanta operated only during summer season, there is not reliable information yet, weather it will be resumed in 2021. Lieb Management | Travel South USA 13
STATE OF LONG-HAUL OVERSEAS FLIGHTS DELTA Airlines DIRECT AMERICAN Airlines DIRECT ATL – FRA Operating 6x a week CLT – FRA Suspended until further notice ATL – MUC Suspended until further notice CLT – MUC Suspended until further notice ATL – DUS Suspended until further notice DFW – FRA Operating daily ATL – STR Suspended until further notice DFW – MUC Suspended until further notice ATL – VIE Suspended until further notice DFW – BER Suspended until further notice ATL – ZRH Suspended until further notice DFW – VIE Suspended until further notice ATL – GVA Suspended until further notice DFW – ZHR Suspended until further notice RDU – FRA Suspended until further notice DFW – GVA Suspended until further notice LUFTHANSA DIRECT UNITED Airlines DIRECT ATL – FRA Suspended until further notice ORD – FRA Operating daily ORD – FRA Operating daily IAD – FRA Operating daily IAD – MUC Bookable – IAD – MUC Bookable – codeshare with LH codeshare with UNITED IAH – FRA Bookable – IAD – VIE Suspended until further notice codeshare with UNITED CLT – FRA Suspended until further notice IAD – ZRH Suspended until further notice MCO –MUC Suspended until further notice IAH – FRA Bookable – codeshare with LH MCO – FRA Suspended until further notice IAD – GVA Suspended until further notice ATL – GVA Suspended until further notice CONDOR RDU – FRA Suspended until further notice MSY – MUC Suspended until further notice LEGEND ATL Atlanta Hartsfield GA RDU Raleigh Durham NC ORD O‘Hare Chicago IL FRA Frankfurt Germany DFW Dallas Ft. Worth TX MUC Munich Germany MCO Orlando FL ZHR Zurich Switzerland CLT Charlotte NC GVA Geneva Switzerland IAH Houston, TX BER Berlin Germany IAD Dulles Washington D.C. VIE Vienna Austria MSY New Orleans LA STR Stuttgart Germany DUS Duesseldorf Germany Lieb Management | Travel South USA 14
STATE OF LONG-HAUL OVERSEAS FLIGHTS Airlines are urging governments to find alternatives to general travel restrictions in the midst of the second wave of infections in Europe: W ith Lufthansa and Alitalia wanting to use rapid antigen tests and the Lufthansa Group in particular is testing how best to integrate these rapid tests into the passenger travel chain and had some success recently A s of December 19, 2020, Delta Air Lines has started to offer flights between Atlanta and the Italian capital Rome, where passengers are being tested for the coronavirus several times and thus not have to go into quarantine after arrival So far, we only have information of Delta Air Lines, blocking the middle seat: A ctually, the middle seat on Delta Air Lines flights was to remain free only until the end of January 2021. Now, passengers of the US carrier will be able to enjoy a greater distance from their fellow passengers until at least March 30, 2021. The airline is responding to persistently high Covid-19 infection rates in the U.S., as well as in other parts of the world, in hopes of increasing customer confidence in safe air travel Conclusion: With the second wave of infection numbers since November in the German-speaking markets and the fact that winter is also not the peak season for the United States as a travel destination, intercontinental flight connections are at a historic low. With the prospect of recovery in the summer and fall months of 2021, we expect a renewed increase in the number of connections and are hopeful that from 2022 charter carriers such as Condor will again fly to US destinations. Lieb Management | Travel South USA 15
TRAVEL RESTRICTIONS TO THE USA Since Mid-March 2020 leisure-travelers from the European Schengen-area are not allowed to enter the United States. If this so called “travel ban” might be lifted by the new US-administration in the foreseeable future, there is the high chance, that additional safety and quarantine measures will be implemented. We are confident, that the traditional good and trustful relations between Germany, Austria and Switzerland on the one side and the United State on the other, will be revived soon and once again an unbureaucratic entry with the help of ESTA regulations becomes normal again. Current entry regulations: A ban on entry applies to persons who have been in Germany or another country in the Schengen area within a period of 14 days prior to entry into the USA. Exempt from the entry ban are U.S. citizens, persons with permanent legal residence in the U.S. (“green card” holders), persons who are in a close family relationship to a U.S. citizen or a person with permanent legal residence in the U.S. if certain requirements are met, and diplomats or employees of international organizations. Further details are published by the U.S. missions in Germany, which may provide information on additional case-specific exceptions depending on the situation and in accordance with national interests (Source: USA / Vereinigte Staaten: Reise- und Sicherheitshinweise - Auswärtiges Amt (auswaertiges-amt.de). Vice-versa, the USA are currently not on the positive list of countries from which entry to Germany is permitted (entry only in exceptional cases). However, the list is to be updated regularly. Changes may therefore occur depending on changes in the pandemic situation. From January 26, all airline passengers entering the USA will need a negative Corona-test not older than three days and the CDC recommends a seven-day quarantine with another test 3-5 days after post-arrival. A well-thought-out testing strategy could help lift travel restrictions soon. Lieb Management | Travel South USA 16
Travel Industry Landscape
OVERVIEW OF TRAVEL TRADE LANDSCAPE Tour operators continue to play a major role in the German market. There are approximately 3,000 tour operators in Germany. Travel agencies are the most popular medium for tour operator sales, accounting for around 70 percent of bookings. Evaluations clearly show that in the past 20 years the share of organized travel via travel agencies/tour operators has increased significantly. (source: DRV) In general, Switzerland has a smaller tour operator outbound market compared to Germany. In Switzerland, travel agencies often act as tour operators themselves by putting together individual packages for their customers. The top tour operators in Switzerland for 2019 were Hotelplan Suisse, DER Touristik Suisse (Kuoni, Helvetic Tours, ITS Coop), and TUI Suisse. Similar to Switzerland, the Austrian market is much smaller than the German market and Austrian tour operators will work with both outgoing and incoming travelers. However, the Austrian travel industry is similar to Germany’s, as the top 5 tour operators in Austria are owned by German tour operators. In 2018, TUI was by far the top tour operator in Austria followed by Verkehrsbüro Group (Eurotours and Ruefa Reisen) in second place and DER Touristik in third place. Th e largest tour operators in German speaking Europe in 2019 were: TUI, Thomas Cook, DER Touristik, FTI, Aida Cruises and Alltours Th e leading online tour operators in 2019 (by usage) were booking.com (24 percent), ab-in-den-Urlaub.de (15.3 percent), Expedia (14.6 percent), trivago.de (11.7 percent), and HolidayCheck.de (10.7 percent) (Source: Statista) source: DRV Lieb Management | Travel South USA 18
OVERVIEW OF TRAVEL TRADE LANDSCAPE Tour Operators with US Focus/product: For travel to the US there are a number of specialists, which due to their focus, higher flexibility in product display, marketing activities and direct sales are more important for the Southern States than most of the wholesalers: Specialists Wholesalers Canusa Touristik Dertour/Meiers Receptives: Bonotel, ATI Weltreisen/Kuoni Receptive: owns New World Travel CRD Touristik Receptives: Bonotel, ATI, Tourico, GTA, Hotelbeds Explorer Fernreisen Receptives: Bonotel, ATI, Tourico,GTA, Hotelbeds America Unlimited Receptives: Bonotel, ATI, Tourico, GTA, Hotelbeds TUI (Germany, Austria, Switzerland) Receptives: Bonotel, GTA, Knecht Reisen Hotelbeds, ATI (Switzerland) Receptives: NWT, ATI, ART, Bonotel, Tourico, FTI Touristik (Germany, GTA Austria, Switzerland) Receptive: Meeting Point International Lieb Management | Travel South USA 19
OVERVIEW OF TRAVEL TRADE LANDSCAPE Printed brochures (“catalogs”) are still important in the German speaking markets, consumers like to pick up a guide in the travel agencies to study it at home. Due to the corona crisis, not all tour operators produced catalogs this season. For example, CANUSA Touristik didn’t produce a new brochure for the next season, they have a new online inspirational guide for their clients. It’s becoming more important to inspire the clients with nice images and give some information about the destination. Also TUI is changing its print products for next season, the Camper catalog will become a magalogue. These so-called “Magalogues” are becoming more popular, it’s a mix between a catalog and a magazine with many images, description of the destinations and insider tips, but no prices. The trend might be that less tour operators work with brochures, online product will become more important, also in order to make changes more easily. Brochure validity: U sually year round: April to March. Brochures are published between November and February; re-prints with updated prices may be produced a few months later. Some operators run brochures that are only valid for six months (April to October and November to March/April) Brochure space policy: P roduct will be given space in operators’ brochures at the operator’s discretion. Product inclusion is generally dependent on the relationships or agreement with partners Setting rates: M ay/June for brochure updates which are published in November. July/ August for brochures which are published Dec/Jan/Feb. Rates are normally set two months before brochure is published Lieb Management | Travel South USA 20
STATUS OF TOUR OPERATORS WHO HAVE PREVIOUSLY WORKED WITH TRAVEL SOUTH USA It’s not just the large US-specialists that can be relevant for regions like the Southern-US states. Smaller Tour Operators, who focus on the US often have very loyal customers who travel to the USA more often and are therefore ideal for 2nd/3rd tier destinations. Tour Operators specializing on certain travel types as Outdoor /active trips can be interesting. Due to the rich culture, musical landscape and history, group tour operators - which often emerged from small travel agencies with loyal clientele - are also highly interesting partners. Travel Agencies US-Specialists Long-haul specialists (selling own product as well) (partly own travel agency) ruising Reisen C A AR Anglo-American merikareisen.at A rlebe Fernreisen E Reisebüro GmbH merica Unlimited A airflight Touristik F F ly2America anusa Touristik C arawane Reisen K D istinc Travel RD Touristik C necht Reisen AG K aszination Fernweh F iamir Erlebnisreisen D Niche Tour eridia Reisen M D rp Kulturtours uck-Zuck Urlaub R Wholesalers M aya Travel Inn njoy America E UI / TUI Suisse T sareisen.de U ER Touristik D TI Touristik F xplorer Fernreisen E otelplan MTCH AG H All of the above named are still in business and have kept all of their US-Southern product! Even if some are not producing a brochure in 2020/21, their portfolio is online, and their offices are up and running. Please find in the following short notes on selected companies, due to certain developments throughout the COVID-19 pandemic. Lieb Management | Travel South USA 21
STATUS OF TOUR OPERATORS WHO HAVE PREVIOUSLY WORKED WITH TRAVEL SOUTH USA Most tour operators in Germany/Austria & Switzerland had to reduce their teams and their working hours during the pandemic. Many tour operators secure jobs in the corona crisis by facilitating short-time work. Short-time work (Kurzarbeit) is a social insurance program whereby employers reduce their employees’ working hours instead of laying them off. Here are some updates from several tour operators from the German speaking markets (as of January 14, 2021): C RD Touristik: CRD has been acquired by Berlin-based Geoplan Touristik GmbH after going into administration in April 2020. Both companies continued to work autonomously under the management of Geoplan CEO Tobias Büttner. The newly formed CRD Touristik GmbH is be a wholly owned subsidiary. It remains based in Hamburg and operate as a separate unit true to its values. In total 16 out of 28 employees remained with the company C ANUSA Touristik: CANUSA also had to reduce their staff members all over Germany, in their travel agencies as well as their headquarter in Hamburg. CANUSA stated that they already have bookings for 2021 and are quite optimistic for the time when the travel ban has been lifted. They also started marketing activities with some destinations F TI Touristik: Germany’s third-largest tour operator FTI Group has gained €235 million in state financial support with the backing of majority shareholder Samih Sawiris. Nevertheless, they had to close down language holidays specialist LAL Sprachreisen, the small FTI Cruises business (with its single ship, the Berlin), the Fly.de flight sales portal and the Touristic 24 call center S TA Travel: The travel agency chain, which originally had 42 branches in Germany, had filed for insolvency under its own administration during the Corona crisis in August 2020. They have sold part of its nationwide branch network and 26 branches were taken over by Cockpit- Flug & Touristik GmbH T UI Germany: The travel group, hit hard by the Corona crisis, is saved from bankruptcy by a capital increase. TUI’s owners have cleared the way for the German government to take a stake of up to 25 percent plus one share in the tourism group. The TUI Group also made top management changes, bringing hotel brands Robinson and Magic Life closer together, and expanding destination activities in a series of restructuring measures Lieb Management | Travel South USA 22
STATUS OF TOUR OPERATORS WHO HAVE PREVIOUSLY WORKED WITH TRAVEL SOUTH USA America Unlimited: In 2020, CEO Timo Kohlenberg had the idea of offering trips to destinations without travel warnings and therefore they founded a new tour operator brand, called Corocierge (Corona and Concierge). Corocierge is the first Corona travel agency to specialize in travel in pandemic times. The new brand will prepare their customers on what conditions must be met, what restrictions are to be expected and how entry will be handled H otelplan: Hotelplan Suisse expects half of its turnover in 2021, but thanks to the backup of its mother company Migros, they are optimistic to survive the crisis. Hotelplan`s premium brand Globus Reisen will be stopped as of end of January 2021. All 5 Globus Reisen lounges will be renamed by January 31, 2021 and remain with the branch network of Hotelplan Suisse D ER Touristik: The Corona crisis is also taking its toll on DER Touristik. The travel group has to streamline its operations in Germany. The number of management positions has been reduced and the number of employees will be cut by 250 full-time positions as well B oomerang: Formerly carrying a good portion of Southern-US product, Boomerang took out all of their US product and focused strictly on Canada. This decision was made actually before the Corona-crisis and might be revised in the future. During the year 2020, the company had to reduce their sales branches massivly, laying off a total of 22 employers A RGUS Reisen: They had to lay off some staff, nevertheless the company benefits from government support. But they kept all product, also the various roundtrips and properties, being featured in the Southern US states. Many states are presented with own sub-pages on the Argus website, including tour suggestions, attraction highlights and special suggestions. Argus is very confident to survive the crisis and currently work on their new website layout A mericareisen.at: They are still busy with cancellations from 2020’s bookings and haven’t received all refunds from the airlines yet. They have not any bookings or requests for the US in 2021, not for Canada either. Their customers are very careful and will wait how the situation develops Lieb Management | Travel South USA 23
STATUS OF TOUR OPERATORS WHO HAVE PREVIOUSLY WORKED WITH TRAVEL SOUTH USA Usareisen.de: As a travel agency and brand of Flamingo Company Fernreisen they are specializing in travel to North America. They offer programs and products of leading tour operators, mainly FTI and focus on direct sales through their travel portals USA-Reisen.de, drive-usa.de and drive-canada.de and their stationary travel agency in Berlin. With direct access also to portals such as Expedia, usareisen.de is able to provide customers with a variety of offers even in areas less covered by receptives. They also offer creative marketing ideas Ruck Zuck Urlaub: The small US-specialist had an idea to boost the business: They advertise an online wine tasting with their customers and sell corresponding wine boxes. Since wine tasting is difficult in reality at the moment, the company moved such events to the Internet. Customers can order boxes of different types of wine to take home. The wine tasting will then take place via Facebook/zoom video. There, customers are shown which wines they should now open and all information about the wine. Participants can use the commentary function to directly participate in the event and ask questions Explorer Fernreisen: Their sales offices have decreased working hours from 10am-4pm to 11am-3pm as they had little requests and bookings throughout 2020. Up to November the number of requests and bookings were higher, but even then, only 10% of last year’s revenue during the same time period. Popular destinations in the past months were Maldives and Seychelles, but when discussions about a second lockdown started the number of bookings decreased again Cruising Reise: Up until January 2020, did not see any bookings for 2021 yet, some requests for Canada though. They don’t do any marketing activities or product development due to short-time working. They also didn’t produce a catalogue for 2021. Most of their clients rebooked their vacation from 2020 to 2021. Product-wise they keep all of their US-product, including the Southern States, routings for the South had been expanded significantly before Covid-19, also due to marketing efforts. Lieb Management | Travel South USA 24
STATUS OF TOUR OPERATORS WHO HAVE PREVIOUSLY WORKED WITH TRAVEL SOUTH USA Summary: The major travel groups in Germany such as DER Touristik, TUI and FTI Touristik are currently in the midst of restructuring. Job positions are being re-staffed, and in some cases, jobs are being cut and reorganized in order to be able to survive in the future. Despite short-time working, many tour operators who are selling the US and are working with Travel South USA, had to cut jobs and/or downsize their companies already. But the main contacts in product management and their positions have hardly changed at the moment. Overall, tour operators have not reduced their product portfolio during the pandemic and have left it unchanged. Some tour operators who are still printing catalogs have shown less product there in some cases, but the all products are still available online. Many tour operators already have some bookings for 2021 to the US, mainly for fall/winter 2021. Due to the relaxed cancellation conditions, many customers cannot wait to book their vacations and are planning their trips already. Some tour operators have gotten creative with new ideas, such as America Unlimited and Ruck Zuck Urlaub, who now offers digital wine tastings for example. The tour operators are optimistic because of the advancing vaccination possibilities. Nevertheless, a complete recovery of the travel market is still not expected in 2021 by them. Lieb Management | Travel South USA 25
STATUS OF TOUR OPERATORS WHO HAVE PREVIOUSLY WORKED WITH TRAVEL SOUTH USA All tour operators with Southern States product and with whom the destinations in the German- speaking market have been working are still in business (as of January 14). With support from the German government, the companies will probably manage to overcome the Corona crisis. These are a few examples of what the German government is doing to help companies: The German government wants to secure more jobs in the unprecedented Corona crisis by extending short-time work benefits. This was extended from the regular 12 to up to 24 months (until end of 2021). This helps companies to save staff costs and at the same time allows them, to keep long developed expertise and knowledge Relaxations in insolvency law are to be extended to prevent a wave of bankruptcies in the Corona crisis. Accordingly, the regulation on the suspension of the obligation to file for insolvency continued for the reason for filing for over-indebtedness The so-called “bridging assistance” offers financial support for small and medium-sized enterprises, self-employed persons and non-profit organizations. It helps to mitigate declining sales during the Corona crisis. The support is offered by the federal and state governments. This assistance will run from January 2021 to June 2021 In order to improve the liquidity and cover running costs during the pandemic, it’s also possible to obtain a loan for companies which is easy to apply for, so-called “KfW loans”. The Federal Government has extended this special program until June 30, 2021. In addition, solo self-employed persons and companies with up to ten employees can also apply for a KfW rapid loan Conclusion: The German tour operators have been receiving a lot of support from the German government to survive this crisis and most of them do not need to fear ending up in bankruptcy thanks to the support. As costs remain high, many operators had to lay off some staff members while most of the key personnel in product management remain in place, at least for the time being. In addition to the support of the government, many tour operators worked on creative solutions in order to overcome the situation. Therefore we hopefully won’t see many US tour operators go into insolvency. Lieb Management | Travel South USA 26
TOUR OPERATORS WITH POTENTIAL FOR TRAVEL SOUTH USA Despite the Covid-19 pandemic, the tour operator landscape in German-speaking Europe remains diverse and promising companies are appearing that Travel South USA has not yet been able to invite or had on its radar – because they are expanding the USA in their portfolio, or because they are pursuing new business models. MESO REISEN: A small-sized German tour operator based in Berlin specializing in long-haul destinations including USA, Canada, Asia, Australia, New Zealand, Central & South America and Africa. Their main focus is on FIT products and sustainable travel. MESO also represents AMTRAK in the German market. Currently they are updating their website with more information about the destinations. TOURLANE: An online tour operator for individual and adventure holidays, based in Berlin. They offer their customers the consulting expertise of an offline travel agency combined with the ease and speed of the Internet. Tourlane’s portfolio so far includes trips to more than 40 countries, including Canada and the US (West coast, Hawaii, Florida, Western National Parks and Route 66). Plans before Covid-10 were, to expand into other US-areas. By visiting the website or using the app, users are connected online to travel experts who will personally assist them during their free consultation, the booking procedure and the actual trip. BIKE THE BEST: A German tour operator specializing in motorcycle vacations in North America. They offer pre-planned or tailor-made motorcycle tours throughout the US. So far, their product in the US-Southern States has much room for expansion. The owner Micky Kern, is a passionate biker and US-fan herself. DNDS GmbH – USA-REISE EXPERTE: A German travel agency and small tour operator with strict focus on the US. They do not have a brochure, but a detailed website with their offers. They already offer several of the classic- Southern round trips (use New World Travel and Expedia), however there is potential for growth, especially in the South. The owner David Siemetzki is updating his clientele on a regular basis via online video podcasts. Lieb Management | Travel South USA 27
PRODUCT PRE/POST COVID-19 Most tour operators stated that they will not change their product portfolio during the pandemic. Due to staff reductions and short time working, there is not much time at the moment and the tour operators don’t see the need to change their portfolio now. They stated that they will keep the Southern States in their portfolio like before, the product will not be cut at the moment. They only take out hotels/attractions which are not open anymore or where the contracts expired. Suggestion: The existing product of the Southern States remains in the portfolio of the tour operator for the time being, but some states such as Arkansas, West Virginia and Missouri are almost not included in round trips at all. These states in particular should cooperate with neighboring states and launch new round trips together with a tour operator and carry out smaller marketing activities to promote them, provided that budget is available. Other new combinations of round trips of the states are also possible and easy to implement especially for specialized tour operators. Certainly, the tour operators are open for new suggestions like new itineraries and hotels. They will work on product additions post-Covid and when it is certain that the travel ban has been lifted and the entry into the USA is possible again For most tour operators the hotels will automatically be adapted in their system (if hotels close or made major changes) and they have mostly dynamic rates Many specialized tour operators are currently expanding their product portfolio in general and start offering new destinations. Mainly tour operators specialized in long-haul travel start now with programs in Europe and/or Germany. For example, round trip specialist Ikarus Tours is expanding its European program significantly in the coming year. Also US-specialist CANUSA started to offer trips to Northern Europe for the time being, this will just be an addition to their US/Canada portfolio Lieb Management | Travel South USA 28
CURRENT AND FUTURE TRENDS 1. TRAVEL TRADE G ermany continues to be a very traditional market with about 11,000 travel agencies in Germany (number of agencies pre Covid-19 crisis). Unfortunately, the number of travel agencies will decrease during/after the corona crisis A fter the crisis, travel agencies will continue to be important, if not even more so, for German tourists. Due to many cancellations and rebookings during the pandemic, travelers noticed that it is easier to have a contact person to handle these matters for them Th e topic safety will be much more in the focus when booking a trip than before W hen it comes to the type of travel booking, online bookings are increasing. Online booking platforms such as Tripadvisor, Booking.com or Expedia are becoming more popular. The number of online bookers increased up to 41 percent in 2019. Bookings via smartphone are also becoming more common T our operator packages remain the preferred booking option for long-haul trips and the demand for offline and printed material continues to be high Conclusion: Bookings via OTAs are mainly for short trip or hotels/flights only, travelers mostly need more assistance when booking long-haul trips. Trips to the Southern States of the USA, and thus mainly round trips, continue to be booked through tour operators/travel agencies, as these types of trips are very complex and sometimes require more consultation. Consumers feel safe when booking with an agent and appreciate the personal service and more importantly they feel secure, also due to the insurances. Therefore it is still important that Travel South cooperates with tour operators in the German speaking market. source: DRV Lieb Management | Travel South USA 29
CURRENT AND FUTURE TRENDS 2. ACCOMMODATION In recent years hotels belonged to the preferred types of accommodation for German travelers. According to the German Travel Association DTV (Deutscher Tourismusverband), 48.5 percent of Germans stayed in hotels in 2019 while 22.3 percent planned their overnight stays in a holiday apartment/ home. Since the outbreak of the Covid-19 pandemic, this ratio has changed. For 2021, holiday apartments/homes are the preferred accommodation type (63 percent) while hotel stays are on second position with 31 percent. This shows a survey by the holiday home platform HomeToGo. The Swiss traveler prefers quality and excellent service when travelling. Therefore, according to Visit the USA Market Data, 60 percent Swiss travelers tend to book 4-star hotels. These are important trends during/post Covid-19: T ravelers now place more emphasis on safety and hygiene measures and standards. They feel more comfortable in remote places like campsites or vacation homes/apartments and they pay more attention to the hygiene standards when choosing a hotel It is becoming more and more important for hotels to comply with hygiene rules and to make sure that it is safe. Due to the pandemic, when it comes to lodging, people will prefer smaller hotels, boutique hotels or even private lodging. This is because these proposals turn out to be safer and generate greater trust. Another important priority for travelers is hygiene and following each of the health protocols in the different phases of the tip A nother new accommodation trend might be “Glamping”: this one mixes the concept of camping with luxury in ultra-equipped tents, including all comforts and amenities. Like road trips and nature tourism, camping also stepped into the spotlight among 2020 travel trends. People like the idea of sleeping under the stars. But, they also like hot showers, fluffy towels and the amenities of a 5-star hotel suite which will be delivered by glamping as well Lieb Management | Travel South USA 30
CURRENT AND FUTURE TRENDS 2. ACCOMMODATION RV/Motorhomes In Germany, there was a guest record on campsites in 2020: Despite the Corona crisis, there were 8.57 million overnight stays in July on mobile homes and camping sites, the Federal Association of the German Camping Industry announced. That is 0.5 percent more than in July 2019. This trend will definitely continue over the next years for travel in general. In a camper you have the possibility to be on the road in your own four walls and yet spend your vacation far away from your own balcony or garden. Under observance of special hygiene measures one can go with the camper again confidently on the camping sites (source www.t-online.de) D ue to the Corona pandemic, the demand for motorhome travel will continue to grow as travelers feel safer and can travel to more remote locations rather than staying in hotels. Many tour operators already promote booking RV’s for 2021, since shortages are expected for offers in the US, due to the high demand of motorhomes Conclusion: The Southern States might not be the states with the most offers in this area, therefore one should look there for alternatives for the travelers and offer them comparable possibilities. For example, encourage states to promote more small B&B’s instead of bigger hotels or focus on apartments where the travelers can cater for themselves and therefore avoid crowds in a dining room. Lieb Management | Travel South USA 31
CURRENT AND FUTURE TRENDS 3. TRANSPORTATION Aviation status Due to the Covid-19 crisis, over one million commercial flights have been cancelled in Germany since March 1, 2020. This represents an 83 percent drop in passenger numbers year- on-year. This was reported by the European air traffic control organization Eurocontrol. The largest share of current flight movements is accounted for domestic German connections, of which around half the pre-crisis volume was offered. There were 61 percent fewer connections to European destinations. (source: www.fvw.de). According to the statistics from the National Travel and Tourism Office (https://travel.trade.gov), arrivals from Germany to the United States were down 97.3 percent in August 2020, and down 78.9 percent for the year to date compared to the same period in 2019. G erman leisure airline Condor successfully completed a year-long financial turnaround and will resume its search for a strategic investor once the worst of the corona pandemic is over. Condor was forced into insolvency protection following the collapse of former owner Thomas Cook Group in 2019 and gained financial support from German state authorities to keep it in the air. Since then, the Frankfurt-based airline has managed to reduce its structural operating costs through efficiency measures. Despite the current worldwide travel restrictions, Condor is looking rather positive into the future, restructured its winter flight plan and recently announced new connections to the Dominican Republic and Malé on the Maldives F ollowing a rescue operation by the German government, among others, Lufthansa is now partly state-owned. In total, the countries Germany, Austria and Switzerland invested nine billion Euros in the airline group. In addition the airline was able to raise money on the capital market and issued a corporate bond in the amount of one billion Euros. The goal for the airline however is, to touch as little of the money as possible and to free himself from state ownership as quickly as possible Lieb Management | Travel South USA 32
CURRENT AND FUTURE TRENDS 3. TRANSPORTATION Rentals Sixt, the German rental car company, is again making a quarterly profit: when the half-year figures were presented, Sixt had already reported that things were slowly starting to pick up again. For the future, the service provider is confident and firmly believes in its business model: “The long-term trend towards individual mobility is more likely to be promoted by Corona,” CEO Erich Sixt is convinced. Sixt is undoubtedly proud of its business in the USA. The expansion there is progressing. Sixt is now represented there at 100 stations and has a presence at almost all important airports. According to his own statements, Sixt was recently able to take over ten airport stations from insolvent competitor Hertz (source: fvw.de) Conclusion: In our opinion, rental cars will continue to be important for German travelers, as they allow them to be independent and explore a lot at their own pace. It will continue to be a popular means of travel post-Covid. Lieb Management | Travel South USA 33
CURRENT AND FUTURE TRENDS 4. ATTRACTIONS During the pandemic, the tour operators kept the attractions they featured before in their portfolio, but didn’t add any new ones though. It’s possible to book them separately from the trip, but sometimes they are also included already. For 2021, the tour operators will continue selling all available attractions and will be open to add new ones once the borders are open. The attractions should be bookable through a receptive operator According to several tour operators, City Pass as well as individual attractions are good for their portfolio and they don’t have a real preference. Especially the “smaller” attractions might be better via City Pass, certain others, such as Alcatraz for example, are very popular and are therefore more of a single attraction. It might be more attractive for the tour operator as well as for the attraction if they can promote them individually. But if this “attraction” is then also included in the City Pass, it’s good as well Conclusion: In the future it will be more important, also for attractions, to follow the hygiene concepts and rules for the client’s safety. It is definitely recommended for big cities to offer some kind of City Pass to bundle the attractions for the traveler. It is much clearer and possibly one could also offer uniform hygiene concepts and promote them via a so-called Attraction Pass/City Pass. Lieb Management | Travel South USA 34
DURATION AND TYPE OF VACATIONS TO THE US Due to the high number of paid vacation time, Germans stay in the United States for around two weeks on average. Certainly, short trip such as Christmas Shopping are popular, too. Due to the new rules and regulations caused by the pandemic (Corona testing etc.), most likely German travelers will not just stay for a short time, but extend their stay by e.g. combining destinations with beach and city vacation. They will continue to visit more than one state and combine states during their stay The US traveler from Germany mainly wants to be independent and explore the country on his own. He brings a lot of time and would like to see a lot and preferably several states and not just one region. His goal is to experience a lot and also get to know the other culture. This will probably not change much “post Covid”, but the traveler will become more careful and pay more attention to safety and hygiene and perhaps avoid larger crowds and especially in the first time rather enjoy nature than the bigger cities A good example which will work well in the future and will most likely become more popular in the future are tools to create round trips which are completely adapted to the needs of customers. The German tour operator FTI invented such tool called “360Grad”, it’s very flexible and FTI only give suggestions to their clients and they can change and adapt the room nights and route as they like Lieb Management | Travel South USA 35
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