German tour operators optimistic after record year

23/12/2015 Top Stories , Tour Operators

The overall German organised travel market is estimated to have grown 3.8% to €27.2 billion

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Tour operators in Germany are mostly positive about the outlook for 2016 despite many uncertainties after achieving record results this year, according to fvw’s annual market overview.

The 56 tour operators who participated in this year’s fvw dossier increased revenues by 4.2% to €21.2 billion in the year ending October 2015, while their customer volumes rose by 2.2% to 32.7 million. These companies are estimated to cover about 80% of the total market.

The overall German organised travel market is estimated to have grown 3.8% to €27.2 billion, according to DRV calculations based on the fvw dossier figures. Total customer numbers are put at 44.9 million, up slightly from 44.2 million last year. This slightly lower growth rate is based on the very low 0.5% growth generated by the many small coach, rail and self-drive tour operators this year.

Long-haul holidays and cruises

Growth drivers this year were once again long-haul holidays, with a 6.9% rise in sales, and cruises, with a 10.2% increase in revenues, the fvw dossier showed. This higher growth for more expensive holidays, resulting in a different overall product mix, also explains why tour operator revenues grew by two percentage points more than customer numbers. Sales of package holidays in short- and medium-haul destinations – the core business of most tour operators – grew about 4% this year, according to DRV calculations.

However, the profitability of German tour operators declined slightly this year, according to the dossier results. Half of the 56 tour operators improved profits in 2015 compared to two thirds last year, while one third had stable profits (18% last year) and the remaining 18% (including TUI and Thomas Cook) had lower profits

‘Big Seven’ dominate the market

The overall ranking of the seven major German tour operators did not change significantly this year. TUI (which did not participate in the dossier survey) maintained its clear market leadership with revenue growth of 3.4% to an estimated €4.5 billion. Customer numbers were 1% higher at 6.3 million. If the separate sister companies TUI Cruises and Hapag-Lloyd Cruises are included, then the group’s German package holiday revenues rise to €5.4 billion.

Second-placed Thomas Cook (also a non-contributor to the dossier) increased Germany revenues by 2.4% to an estimated €3.5 billion. This was largely due to Condor’s seat-only sales which grew to about €630 million while Thomas Cook’s German tour operators had a slight 0.4% drop in revenues. Customer numbers rose fractionally by 0.7% to 6.1 million.

Increased revenues

DER Touristik, which is larger than Thomas Cook in terms of tour operator revenues, grew only fractionally by 0.7% to €3.2 billion this year while customer numbers stagnated at 6.4 million. The Frankfurt-based individual holidays unit increased revenues thanks to long-haul growth while the Cologne-based package holidays unit saw a drop in revenues, although customer numbers increased.

Fourth-placed FTI, with 3.8 million customers, grew by only 2.4% to €2.15 billion this year (including its Austrian and Swiss subsidiaries) after several years of strong growth. Alltours had growth of 2.2% to €1.5 billion and 1.87 million customers respectively.

Market shares

Aida Cruises’ revenues increased only moderately to €1.3 billion due to the delayed launch of its new flagship Aida Prima. Schauinsland-Reisen continued its double-digit growth rates this year with a 13% revenue increase to €1.1 billion, and customer numbers were up nearly 10% at 1.4 million.

In terms of market shares, TUI Germany (including subsidiary brands) has a 16.5% share of the overall €27.2 billion market, while TUI Cruises/Hapag-Lloyd Cruises have a further 3.3%. Thomas Cook has a market share of 12.9% followed by DER Touristik (11.4%), FTI (7.9%), Alltours (5.5%), Aida Cruises (5%) and Schauinsland (4%). These top seven tour operators account for about two thirds of the total market.

Positive outlook

Looking ahead, most tour operators surveyed for the fvw dossier expect to increase revenues in 2016, generally by up to 5%. However, they are much more cautious in their forecasts for next year following the terror attacks in Paris and the generally uncertain political situation in many parts of the world.

In terms of bookings so far for 2015/16, demand is much weaker for destinations in the Eastern Mediterranean such as Turkey and Greece than for the Western Mediterranean (Spain and Portugal). Long-haul holidays and cruises continue to see good bookings, according to tour operators.