Market Update - 06.06.24

CURRENT MAJOR TOPICS WITH THE TOURISM INDUSTRY IN THE DACH REGION

• FTI INSOLVENCY:

• WHAT HAPPENS NOW: FTI has filed for insolvency. An insolvency administrator is now taking over and examining whether FTI can be continued or sold. If both fail, FTI will be wound up. The insolvency administrator is assessing the value of FTI and analysing contracts. Investors such as Certares could still be interested, despite the lack of financing and state aid. Employees receive insolvency compensation for three months. The insolvency administrator must make a quick decision on how to proceed. For travellers, this means that there will probably be no more trips from Tuesday. Ongoing trips are covered by the German Travel Security Fund so that they can be completed as planned. Read more

• FTI BANKRUPCY LEADS TO REORDER OF THE MARKET: Following the insolvency of tour operator FTI, the travel market is reorganising itself. Competitors such as TUI and Dertour are planning to increase their offers and woo FTI customers. TUI is offering discounts and waiving advance payments, while Dertour is also increasing its flight and hotel contingents. The German Travel Security Fund covers the losses so that holidaymakers are reimbursed for their package holiday payments. FTI had an aggressively priced business model with a low equity base, which got the company into difficulties. There are currently around 65,000 FTI holidaymakers abroad, including many in Greece, where payments to hotels are outstanding. Read more

• HOLIDAY AIRLINES REMAIN CALM SO FAR: The vacation flight industry does not expect the insolvency of FTI to have a serious impact on its capacity and flight planning in the summ. r. A survey by “touristik aktuell” revealed that airlines such as Condor and Sun Express assume that the gap created by FTI will be quickly closed by the market. Although the FTI bankruptcy affects many bookings in Turkey, Sun Express plans to leave its seat capacity for trips to Turkey and Egypt unchanged and to provide additional capacity if required. Vacation airlines such as Discover Airlines and Sundair are still examining the specific impact on their summer capacities. At the same time, the airlines are busy bringing affected FTI customers home safely in accordance with the requirements of the German Travel Security Fund. Sun Express and Condor assure that all booked return flights will be operated as normal. Read more

• WHAT THE TRAVEL INDUSTRY SAYS ABOUT THE FTI BANKRUPTCY: The travel industry is affected by the FTI insolvency and emphasizes the importance of customer money protection. Martin Wittwer from the Swiss Travel Association emphasizes the added value of travel agencies, while Marco Amos from the Guarantee Fund stresses the financial management of a possible FTI bankruptcy in Switzerland. Alex Vogel from STAR Enterprises advises travel agencies to take specific measures to limit the damage. Representatives such as Louis Burgess from the Malta Tourist Board and Deniz Ugur from Bentour Reisen emphasize the importance of diversification and customer confidence. Christina Wagner from Travelshop criticizes the uncertainty and the additional workload for travel agencies, while Stephan Amstad from Fespo-Messe regrets the loss of an important partner. Barbara Wohlfahrt from Reisecocktail GmbH calls for better communication strategies and additional safeguards for individual services. Heinz Zimmermann from Topline Group emphasized the challenges posed by changing customer behaviour in the digital age and questioned FTI's ability to adapt to these new market conditions. Read more

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• ALMOST ONE IN TWO ABANDON BOOKING PROCESS: The survey commissioned by the payment platform Finmont shows that almost half of European travelers (47%) cancel online bookings for flights or vacations if the process takes too long or is too complicated. A quarter of respondents (25 percent) prefer providers that transparently display all costs and do not upsell. With a third of respondents (32%) wanting to travel more in 2024 than before, Finmont warns of the risk of losing potential customers. The payment platform emphasizes the importance of simple booking processes and transparent cost information in order to retain customers. Finmont, started by founders of flight ticketing platform Hahn Air, offers B2C and B2B payment methods and promotes a seamless tourism payment solution. Travel providers are expanding their payment options, while tech service providers also see business potential in the payment sector, as shown by strategic acquisitions of payment service providers by GDS operators Amadeus and Sabre. Read more

• MARKET RESEARCHERS ANTICIPATE A STRONG SUMMER SEASON: The analysis by Travel Data + Analytics (TDA) shows positive developments for the travel industry: the 2023/24 winter season is recording double-digit sales growth compared to the previous year and pre-corona levels. 72% of the previous year's sales for the new summer season have already been pre-booked by May. Summer sales are up by 20% thanks to good early bookings. A quarter of the turnover generated in April is already attributable to the coming winter season and later vacation trips. Despite the growth in sales, there were seven percent fewer booked travelers compared to pre-corona levels. Long-distance travel accounts for almost 25 percent of total sales, but is not yet at pre-pandemic levels. Package tours are experiencing strong growth, particularly in online sales. Average travel spending is rising moderately by four percent. The positive trend gives confidence for a successful summer season, supported by increased income and a high level of early bookings. Read more

• TOP LONG HAUL DESTINATIONS: Demand for long-haul travel continues to rise, and various tour operators are reporting growing interest in destinations in North America, the Indian Ocean and the Caribbean. For the Dertour Group, the USA and Canada are in first place, followed by the Maldives, Mauritius, the Seychelles, the Dominican Republic, Mexico and Cuba. Thailand is seen as one of the biggest winners in the coming winter, also due to its good price-performance ratio. Sri Lanka is experiencing a surprising comeback and is one of the top destinations for various tour operators such as FTI and Alltours. Japan is also cited as an up-and-coming destination with high demand, particularly by TUI and Schauinsland-Reisen. Read more

• THIS IS WHERE EUROPE IS MOST AFFECTED BY MASS TOURISM: Many vacation regions in Europe are struggling with the negative effects of mass tourism, particularly in the Balearic Islands and the Canary Islands, where there have been protests by locals. Newly collected figures show that mass tourism is most pronounced in the southern Aegean in Greece, followed by the Ionian Islands and the Croatian Adriatic coast. The Canary Islands are the most visited destination in the EU in terms of absolute numbers. Tourism plays an important role in many EU countries, with the hospitality industry accounting for the largest share of gross value added in Greece, followed by Croatia, Portugal and Spain. Read more

• WHY THE CHINESE TRAVEL DIFFERENTLY AFTER CORONA: Despite economic challenges, Chinese travelers are showing a strong interest in traveling abroad, with Japan and countries in Southeast Asia gaining in popularity. Chinese travel preferences are changing as they increasingly travel individually and favor niche markets such as health, wellness and culinary. Social media plays an important role in discovering new destinations and experiences. The ITB China show saw strong participation from exhibitors and visitors, with 13 destinations attracting Chinese visitors for the first time. Germany had a rather modest representation, while other European countries had their own stands. Despite low travel numbers to African countries and the Gulf, the interest of Chinese tourists in these regions is increasing significantly. Companies such as TUI are increasingly focusing on the Chinese market and are planning expansions in Asia. Read more

• CHINESE BUILD WORLD'S LARGEST ONLINE TRAVEL AGENCY: The travel booking portal Trip.com has long been number 1 in Asia - now the Chinese want to catch up in Europe. The aim is to become the strongest travel agent here too: with the help of artificial intelligence, state-of-the-art software, apps and social media. An annual turnover of the equivalent of 150 billion euros, a net profit of 1.3 billion euros and an increase in booking figures in Europe of 900 percent compared to the previous year: the Chinese travel platform Trip.com is on its way to becoming the world leader. Read more

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CURRENT TOPICS WITHIN THE TRANSPORTATION INDUSTRY IN GERMANY & EUROPE

• DISCOVER LAUNCHES LONG-HAUL BASE: The Lufthansa subsidiary Discover is expanding its portfolio and will launch long-haul flights from Munich in March 2025. This new commitment is seen as an important step for the Lufthansa Group. Discover will employ up to 500 people at Munich Airport and plans to initially station two Airbus A330-300 aircraft. The new direct flights from Munich can be booked immediately and include destinations such as Orlando, Windhoek and Calgary. This expansion of the service is intended to strengthen Discover's presence at the Lufthansa hub in Munich and offer passengers more choice. Flights will depart from Terminal 2, enabling a seamless transition from Lufthansa to Discover Airlines. Read more

• EIGHT INNOVATIONS THAT COULD REVOLUTIONIZE FLYING: The Crystal Cabin Awards honored eight groundbreaking innovations designed to improve the flight experience. These included the “Bermud Air Aisle Class Suite” for more comfort in economy class seats and “Starlight” from Collins Aerospace to reduce the weight of aircraft components. Safran's “The Cube” minimizes waste and bacteria in galleys, while Accenture's safety bag contains fires from electronic devices. Diehl Aviation's “Wellbeing Zone” is designed to increase comfort on ultra-long flights. Thales Avionics' “Flytedge” offers cloud-based in-flight entertainment, and Diehl Aviation's “Eco Sidewall” reduces the weight of the sidewall and lowers the CO2 footprint. Finally, Flexifold from Tongji University offers a flexible economy seat for more comfort and revenue opportunities. Read more

• DISCOVER AIRLINES: THREE NEW LONG-HAUL DESTINATIONS FROM MUNICH: Discover Airlines announced its future plans back in September 2023 and held out the prospect of resuming long-haul flights from Munich in spring 2025. Now the long-haul base is to be opened as early as next March and the range of services significantly expanded. This and more was announced by the airline's CEO, Bernd Bauer, at a press conference. The new long-haul destinations from Munich include Orlando, Windhoek and Calgary. There are also plans to increase the number of Discover Airlines destinations in Munich from 23 to 30 in the coming year. Read more

• NEW DIRECT CONNECTION FROM MADRID TO LISBON: The governments of Spain and Portugal have decided to build a new high-speed line between Madrid and Lisbon in order to shorten the travel time between the two capitals. Currently, the train journey takes nine hours and requires two changes. The new line is expected to reduce the journey time to just three hours, probably by 2034, but by 2027 it should be reduced to six hours when sections are opened. The governments hope that the new connection will reduce the number of flights between the two cities, as there are currently 40 flights a day between Madrid and Lisbon. Read more

• "EDELWEISS HAS EXPRESSED INTEREST IN LIMA": The director of Tourism Promperú, María del Sol Velásquez, talks about the development of tourism in Peru, the country's attractions and Edelweiss' interest in a direct connection from Switzerland to Lima. Tourism in Peru is slowly recovering from the effects of the pandemic, with the country being particularly attractive to Swiss visitors thanks to its rich cultural history, natural diversity and gastronomic attractions. Promperú focuses on digital marketing and international tourism fairs to position Peru as a destination of choice. Peru is characterized by its unique geographical, cultural and gastronomic diversity and has received several awards for its cultural and culinary heritage. A direct connection between Switzerland and Lima could further strengthen Peru's tourism offer and attract more Swiss tourists to discover the country's unforgettable experiences. Read more

DESTINATION NEWS

• CENTRAL AMERICA: The Central American countries are recommended to long-distance travelers with nature experiences and lots of culture. “Our region is ideal for German tourists,” says Boris Iraheta, Secretary General of the Central American Tourism Agency (Cata) “We offer living Mayan traditions like in Guatemala, centuries-old Mayan temples, nature with jungle as well as active and inactive volcanoes, unusual lakes like Lake Nicaragua and Lake Atitlan, surfing opportunities on the sea and on volcanoes, great diving spots like in Belize, good gastronomy, friendly locals and many boutique hotels.” What's more, Iraheta says of the six Central American countries - Belize, El Salvador, Guatemala, Honduras, Nicaragua and Panama - that there are neither bed castles nor are they overcrowded. The Dominican Republic has also been a member of the tourism promotion agency Cata since 2020, while Costa Rica has no longer been a member since 2021. Read more

• ITALY: In 2023, the Mediterranean country recorded a record high - never before had so many tourists come as last year. According to the statistics authority Istat, these were the highest figures ever observed in tourism surveys. Compared to 2022, the number of arrivals increased by 13.4 percent and overnight stays by 9.5 percent. That is around 16 million more holidaymaker arrivals and 39 million more overnight stays. According to Istat, this even exceeds the figures for 2019, the year before the coronavirus pandemic began. At that time, around 131 million holidaymakers stayed 436 million nights. Read more