Moderate growth in 2006

The German organised travel market grew only moderately this year, below expectations and leaving it below the record set in 2001. Forecasts for 2007 are more optimistic with a consensus prediction of 4.6% growth. Those are the key findings of this year’s annual German Tour Operators Documentation, an in-depth survey of 67 tour operators researched and published by FVW.

The 67 tour operators surveyed increased their combined revenues by 2.7% to nearly EUR 16 billion in the 2005/06 tourism year ending October 31, 2006. Customer numbers went up by 5.4% to 34.4 million. These figures are estimated to cover about 80% of the total organised market. Werner Sülberg, head of Rewe Touristik’s market research department and chairman of the DRV market research committee, estimated that the total market grew about 2% to revenues of EUR 19.8 billion this year, with customer numbers up by 5% to 38.7 million. The moderate growth followed a year of crises, from the “bird flu” to terrorist attacks and the Middle East conflict, along with the World Cup and a very hot summer in Germany which all impacted on customer demand.

Stagnation for charter holidays
The major tour operator trends, according to the survey, are near-stagnation in the charter holiday market segment but good growth for individual modular products such as flights. The cruise sector continued to grow strongly with an 8.6% revenue increase while “land travel” products (self-drive and rail holidays) grew by 6.1%.
The charter holiday segment, which generates the bulk of bookings, grew only about 1.7% in 2006 compared to the previous year’s figure of 4.9%. The short-haul market stagnated (+0.3%) due to the slump for Turkey and Egypt. Good growth of 4.9% for long-haul travel was not sufficient to compensate for the stagnating high-volume mass market. In contrast, seat-only sales were a clear growth area for tour operators.

Little change in market shares
There was relatively little change in market shares (based on revenues) among the leading tour operators. TUI, with a 0.6% revenue decline, dropped by 0.9 percentage points to a market share of 28%. However, the market leader is clearly focusing on maximising profitability at the cost of revenue at present. Number two Thomas Cook (19.1% market share) increased Germany tour operating revenues by 2.1% and customer numbers by 3.9%. Number three Rewe Touristik (18%) improved revenues by 2.3% and customer numbers by 5.2%. But both suffered fractional drops in their market shares. After several years of strong growth, number four Alltours had to be content with a 2% revenue increase and a stagnating market share of 7.1%. A clear winner was FTI which increased revenues by 17% and overtook the Öger Tours group as the fifth-largest tour operator with a market share of 4%. Öger suffered an 8% revenue slump due to the weak Turkey market.

Optimism for 2007
Most tour operators have started the new tourism year with strong winter bookings. Given the wide range of early discounts, however, it is unclear whether these growth rates can be maintained. The DRV predicts full-year growth of 3.5% for the tour operating market. Tour operators surveyed by FVW are even more optimistic: they expect average growth of 4.6%. This rate, if achieved, would enable the German tour operating industry to return finally to pre 9/11 levels and beat the record revenue figure of EUR 20.1 billion achieved in 2001.