Germany Market Profile
In Germany, where traditional tour operator bookings outnumber travel online travel agency bookings four to one, Visit California’s dollars invested in travel trade go a long way. Despite the projected slow in travel in the short term, potential for growth still exists in a country that promotes vacation as a priority and where workers enjoy extended time off. Brakes on German trade due to Brexit are not expected to last after mid-2017, when overall market growth projects more travelers.
MAJOR TAKEAWAYS
- A strong economy has wages expected to rise around 3.0 percent annually through 2020.
- A majority of bookings continue to be done through travel agents due to German consumer travel protection laws.
- Germans have around 25 paid vacation days annually, allowing them the opportunity to plan numerous experiences in a single trip.
- Road trips, gateway cities, and outdoor experiences are primary motivators.
Germany Profile
416,000
$777 Million
Market Performance
Leisure Consumer Insights
Market Conditions
GDP Annual Growth Rate
Germany’s government forecasted a 1.8 percent growth in GDP between 2018 and 2019. Risks for the German economy include Britain’s looming departure from the European Union and the threat of economic crises in Turkey and other countries spreading to other emerging economies. Domestic demand will remain strong but the global economic environment is increasingly difficult. The German economy is traditionally driven by exports and is in its ninth year of expansion, relying heavily on household spending to grow as consumers enjoy record-high employment, rising real wages, strong job security and low borrowing costs. Due to an increasingly tight labor market as characterized by low unemployment and more than a million job vacancies, the government expects nominal wages to rise by 3.0% this year and by 3.1% in both 2019 and 2020. With inflation, wages are predicted to rise to 1.9% this year and 2.0% in 2019, resulting in German consumers having more money to spend.Exchange Rate
- 1 Euro equals 1.1523 U.S. Dollar
- Over the last 12 months, the exchange rate was stable compared to the preceding year with a low of 1.11 and a high of 1.20.
Travel & Planning Methodologies
Airlift
- 52 weekly non stop flights
- 19,000 weekly non stop seats (-9.6%)
- Germany, Austria and Switzerland have four gateways to California: San Francisco, Los Angeles, San Jose, San Diego.
Booking
- The majority of German visitors to the United States book their travel through German tour operators and/or travel agencies, thus availing of the protection of German consumer travel protection laws safeguarding their holiday investment.
- In Germany, 10 tour operators control 80 percent of long-haul travel. German visitors plan ahead and book early.
- The main booking timeframe for summer vacations is November/ December to March.
- Traditional travel agents remained the major distribution channel in Germany last year, increasing their combined sales by 4.6 percent to €26.4 billion last year, according to the annual fvw ‘German travel sales’ dossier.
- OTAs are steadily winning market share with online channels combined accounting for 40% of the overall German organized travel market of €64.7 billion with sales of nearly €26 billion, compared to a 35 percent share three years ago.
Market Barriers & Risk Factors
- Economic saturation, German cautiousness and risk aversion leaves the market open to potential shocks.
- Since 2006 Germans retreated from a variety of destinations, most notably Turkey.
- Concerns regarding an escalation in trade conflict between the European Union and the United States were dispelled when both entities agreed not to impose higher customs duties on automobiles, an industry that is the backbone of the German economy.
- Concerns are growing about Brexit, which will make the exchange of goods and services between the U.K. and the rest of the EU considerably more difficult. This is reason enough for many investing companies to be cautious in their planning.
Competitive Landscape
- Mediterranean Destinations: Spain, Greece, Turkey
- Culinary: South Africa
- Beach: Thailand, Caribbean, Florida
- Family: Florida
- Luxury: Seychelles, Maldives, Thailand
- Outdoor/Adventure/Ski: Australia/New Zealand, South Africa, Canada
Other Market Insights
MARKET
- In 2017, over 2.1 million travelers from Germany visited the United States, accounting for 2.7 percent of international arrivals. Germany is ranked 6th worldwide in terms of visitors per year, making it a profoundly important market for the United States. Germany’s current economic success has led the country to become an extremely well-developed market, with a stable rate of around eight out of ten consumers undertaking trips each year.
AUDIENCE
- German consumers spend freely and book their flights early, both of which are positive indicators. In the long term, Germans of all ages are more interested in traveling than ever before. Growing wealth, an average of 25 vacation days for employees and German passports being one of the world’s most powerful help keep Germany as the third largest international travel market in the world.
PRODUCT EXPERIENCE
- The United States continues to be the leading overseas travel destination for German travelers. With roadtrips, visits to gateways and outdoor/adventure experiences are a travel priority.
Sources
- DIW - German Institute for Economic Research
- RWI - Rheinisch-Westf. Institute for Economic Research
- Deutsche Bundesbank – Federal Central Bank Germany
- xe.com
- DIIO
- U.S. Department of Commerce
- Tourism Economics
- CIC Research, Inc.
- DRV Federal Association of the German Tourism Industry
- ADAC Reisemonitor 2016/17
- ARD/ZDF Media Perspektiven
- Brand USA
- BTW Tourismus Index
- GfK Travel Scope
- RA Reiseanalyse
- Stiftung für Zukunftsfragen Tourismusanalyse
- UNWTO
- Federal Statistics Office Germany
