Market Update - 25.07.24

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CURRENT MAJOR TOPICS WITH THE TOURISM INDUSTRY IN THE DACH REGION

• PROTESTS - GERMANS RECONSIDER HOLIDAY DESTINATION: Protests against mass tourism are causing Germans to reconsider their travel plans. A Hanse-Merkur-Reiseversicherung survey shows one-third of Germans may avoid destinations where tourists are unwelcome. Younger travelers (25-34) are especially likely to change their plans, while only a quarter of 16-24-year-olds are deterred. Despite 39% experiencing hostility from locals, nearly 49% still feel welcomed. Additionally, 90% understand the protests, and many are considering more sustainable travel behaviors. Nevertheless, price and comfort remain crucial for 40% of respondents. Read more

• HOW ONLINE SALES ARE DEVELOPING: The online booking market for vacations continues to grow, with 63% of all travel bookings made digitally. While traditional travel agencies still dominate package tours, the digital sector, led by giants like Booking.com and Check24, is expanding rapidly. Younger customers are driving this trend, preferring online bookings over personal consultations. Major online players, such as Booking.com and Trip.com Group, are gaining more market share, challenging traditional travel agencies. Direct sales by airlines and hotel chains are also increasing as they aim to cut out online travel agency commissions. Online travel agencies (OTAs) are diversifying, becoming tour operators themselves, offering bundled travel packages. This trend sees OTAs and service providers evolving into direct competitors, offering more comprehensive services to meet consumer demands for convenience and cost savings. Read more

• EXTERNAL PRESSURE DRIVES THE TRAVEL INDUSTRY FORWARD: The tourism industry is primarily driven by external pressures, particularly in digitalization and sustainability, according to the Travel & Tourism Radar by ITB Berlin. A survey of 330 companies shows a positive business climate, prompting investments mainly in online presence and digital marketing (44%), and training (29%). Political and economic conditions, including inflation and regulatory requirements, heavily influence the industry’s focus on sustainability, considered equally important across environmental, economic, and social aspects. Legal and ethical standards drive over half the companies to emphasize environmental protection. Meeting customer demands is a primary goal for one-third of respondents, with economic success being less of a driver for sustainability initiatives. Digitalization and regional collaboration are key improvement areas, driven more by necessity than economic motivation. The study indicates that sustainability and digital transformation efforts are more about necessity than economic benefit. A follow-up study focusing on digitalization is planned for mid-October, with results to be included in the ITB Berlin Congress 2025. Read more

• MAJORITY PLAN THEIR HOLIDAY ONLINE: A Bitkom study reveals that 64% of German adults plan their vacations using online travel and comparison portals. Additionally, 47% rely on websites of hotels, travel agencies, or airlines. However, a recent EU ruling has impacted direct bookings for hotels, with Google forced to decouple its Maps, Flights, and Hotels services from its search engine, leading to a 36% drop in direct traffic to hotel websites. Despite the rise of digital planning, traditional methods still hold value. A third of travelers use travel agencies, 22% gather information from television, and 17% still consult paper travel catalogs. Furthermore, 16% look at travel blogs, 13% use social networks, and a small percentage utilize podcasts (3%) or AI tools like Chat-GPT (3%). AI travel tools are emerging, offering personalized and time-saving travel plans based on destination, budget, and preferences, according to Nastassja Hofmann, a digital transformation expert at Bitkom. Read more

• GERMAN CONSUMER SENTIMENT UP IN JULY AMID EURO CHAMPIONSHIP BOOST: In July, German consumer sentiment improved significantly, partly due to increased income expectations and the excitement from hosting the Football European Championship. The GfK and NIM institutes reported a rise in the Consumer Climate Index to -18.4 points, although this remains low compared to pre-pandemic levels of +10 points. Despite real income gains and lower inflation, the long-term impact of this improvement remains uncertain. The desire for significant purchases also increased, but experts caution this boost might be temporary without sustained economic recovery, expected to accelerate next year. Read more

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CURRENT TOPICS WITHIN THE TRANSPORTATION INDUSTRY IN GERMANY & EUROPE

• CLIMATE PROTEST HALTS FRANKFURT AIRPORT: July 25, climate activists from the group 'Last Generation' disrupted operations at Frankfurt Airport by gluing themselves to runways, causing a two-hour halt in flights. This protest follows a similar disruption at Cologne-Bonn Airport the day before. The activists accessed the airport by cutting fences, leading to the cancellation of 140 flights, including those to Zurich and Geneva. Some flights were redirected to other German airports. Although operations resumed shortly before 8 a.m., full normalization is expected to take the rest of the day. German authorities have increased security and are considering stricter penalties for such actions. Eight activists were arrested, with seven successfully gluing themselves to runways. Read more

• CARNIVAL ORDERS THREE MEGA-SHIPS: Carnival Corporation has ordered three new mega-ships for its Carnival Cruise Line from the Italian shipbuilder Fincantieri, scheduled for delivery in 2029, 2031, and 2033. Each ship will feature 3,000 guest cabins and can accommodate nearly 8,000 passengers, making them the largest cruise ships by passenger capacity in the world. The ships will be powered by LNG. This order increases the company's newbuilds for the year to five, including two other ships planned for delivery in 2027 and 2028. Despite high debt, CEO Josh Weinstein views the new ships as a strategic investment to strengthen Carnival Cruise Line’s role and improve financial returns. The company plans to expand its fleet and improve its financial position through continued investment and debt reduction. Read more

• EUROPEAN FOOTBALL CHAMPIONSHIP SET RECORDS IN THE SKY: During the UEFA Euro 2024, air traffic over Germany saw significant increases, peaking on July 15, the day after the final. This date marked the busiest day of the year with 9,979 Instrument Flight Rules (IFR) movements managed by the German air traffic control (DFS). Berlin's BER airport also set a record with 754 IFR movements, an 18% increase compared to its previous busiest day. Overall, from June 14 to July 14, 2024, there were 289,513 flight movements in German airspace, up from 278,589 the previous year. The additional traffic was handled smoothly and efficiently. Read more

• ‍EASYJET ACHIEVES DOUBLE-DIGIT GROWTH IN THE THIRD QUARTER: EasyJet reported a strong performance for the spring quarter, with a 16% increase in pre-tax profit for April to June, reaching £236 million (approximately €280.4 million). This growth was driven by higher ticket demand, with passenger numbers rising 8% to nearly 25 million. Despite a 1% increase in revenue per seat and rising costs, including fleet investments, EasyJet's CEO Johan Lundgren expressed optimism for a record summer, citing popular destinations like Palma, Malaga, Greek islands, and Turkey. The airline has sold 69% of its fourth-quarter capacity and 20% of its first-quarter 2025 capacity. EasyJet is also set to benefit from Lufthansa's ITA acquisition, potentially gaining landing rights in Milan-Linate. EasyJet Holidays is expected to finish the year with a pre-tax profit of over £180 million (€213 million), up 48% from the previous year. Read more

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DESTINATION NEWS

• THAILAND: Swiss travelers are increasingly favoring Thailand over the Mediterranean for summer vacations due to climate change and rising costs in Europe. According to travel specialists, bookings for Thailand have surged, especially to destinations like Koh Samui, Koh Phangan, and Koh Tao, with a significant rise in family trips. This trend is attributed to Thailand’s excellent value for money, favorable weather, and more competitive prices compared to the Mediterranean. Interest in Thailand’s northern regions and Japan has also increased, with travelers exploring both beach vacations and cultural tours. Read more

• SOUTH KOREA: South Korea's Korea Tourism Organization (KTO) is launching the "Fall in Korea" campaign to attract and support travelers. Students can benefit from a collaboration with Isic (International Student Identity Card), receiving the "KTO x Isic Prepaid Card" for use as an ID, transportation pass, and payment card. The card is available to all Isic members visiting Korea and can be picked up at Incheon or Seoul airports. Additionally, KTO is offering support for business travelers extending their stay for leisure (Bleisure) and for those visiting family or friends. This includes a welcome set with discount vouchers for wellness, traditional markets, or Nanta performances. A "Fall in Korea" welcome folder with information on autumn festivals is also provided. Read more

• GREECE: From January to May 2024, Greece welcomed nearly 7 million international tourists, marking a 20.6% increase from the same period last year. This surge resulted in a 16.2% rise in tourism revenue to approximately €3.8 billion. Visitor numbers from major EU markets grew significantly, with arrivals from Germany up 22.2% to around 1.1 million, France up 17.0% to 469,400, and Italy up 68.3% to 353,200. Non-EU markets also saw growth, with UK visitors increasing by 4.1% to 665,800 and US visitors rising by 23.0% to 392,500. However, Russian visitors decreased sharply by 65.9% to 2,600. Read more

• FRANCE: The upcoming Summer Olympics, starting on July 26, are negatively impacting Paris's tourism. While many locals are leaving the city to avoid the event, international tourists are either staying away or postponing their trips. Despite Paris being one of the world's top travel destinations, visitor numbers are down, with daily passenger numbers on Seine cruises dropping from 10,000 to 6,500. Hotel, restaurant, and retail businesses are disappointed, and flight bookings from Switzerland to Paris have decreased. Air France/KLM expects a loss of €160-180 million due to the Olympics, while train travel to Paris has also seen a decline. However, the Paris Tourist Office anticipates a 25% increase in visitors after the games start, though overall sentiment remains pessimistic. Read more

• SPAIN: Despite protests against mass tourism, Spain recorded a 7.5% increase in hotel overnight stays in the first half of 2024, reaching 160.6 million. This rise occurred despite an 8% increase in hotel room prices in June 2024. The growth is driven by foreign guests, with their stays rising by 11.2%, while domestic stays increased by only 0.9%. Protests, such as those in Mallorca, highlight local frustrations over issues like housing shortages and congestion. Local governments have promised measures to address these problems, though details are yet to be provided. Read more

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