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Travelling summer 2024: Time for transformation

Germans' desire to travel in summer 2024 is greater than it has been for a long time. Significantly higher prices do little to change this.

In Germany Demand for holidays is more robust and lively than it has been for a long time. Booking figures are back to pre-corona levels in many places, and even higher in some areas. Neither higher end prices nor international trouble spots are able to spoil the German public's desire for summer holidays and holidays abroad. The Research Association for Holidays and Travel (FUR) expects a similar number of holiday trips in 2024 as in 2019 and forecasts around 70 million trips of five days or more. According to the institute's observations, holiday trips are in second place behind food in terms of consumer priorities, but ahead of housing and health.

Charuta Fadnis, Speaker

Charuta Fadnis, SVP Product & Research, Phocuswright - Copyright_ITB Berlin

While the appetite for holidays remains high, there are hardly any surprises when it comes to menu choices. In summer 2024, Germans will be focussing on tried-and-tested and familiar things. The overtourism debate about the looming capacity limits of many mass destinations has done little to change this. According to a travel insights analysis by Team Neusta, the most popular countries for package holidays this year again include Turkey (30 per cent), Spain (26 per cent), Greece (15 per cent) and Egypt (11 per cent). The market shares have shifted only slightly compared to the previous year. Only Egypt has increased its share from four to eleven per cent. There are also few surprises when it comes to the choice of holiday destinations: The top destinations include Side and Alanya (26 per cent), Majorca (15 per cent), Hurghada and Safada (11 per cent), Crete (8 per cent), and Antalya and Belek (6 per cent). Price increases at almost all levels of the tourism value chain are generally accepted by customers without complaint. Across all bookings, there has been a four per cent increase in the basket value compared to 2023. According to Team Neusta, families are even spending seven per cent more on their travel bookings than in the previous year.

Germans' Unyielding Desire for Summer Travel in 2024

The positive mood on the German market is in line with an international industry climate that is also characterised by optimism and growth. According to the Global Travel Buyer Index survey conducted by the Fried & Partner agency, the vast majority of international buyers in the ITB Buyer Circle expect the current year to be characterised by rising demand. In May 2024, 73 per cent of those surveyed expected incoming bookings to grow, 21 per cent expected business to remain the same and only six per cent predicted weaker demand. "2024 is proving to be phenomenal for international tourism. It is the first year after the pandemic in which there are no longer any Covid restrictions. We expect the industry to generate around 1.6 trillion dollars worldwide, which is more than in the last pre-Covid year," predicts Charuta Fadnis, Senior Vice President of the agency Phocuswright. (see also podcast: Deep Dive: Latest Global Travel Market Insights by Phocuswright)

International Tourism Rebounds with Optimism and Growth

The newly awakened desire to travel is not only motivating European consumers, but is also manifesting itself in other major source markets. The Chinese market is proving to be a global driving force, gaining momentum again after some delay following the lifting of the latest Covid restrictions. "China's outbound tourism is recovering at a pleasing pace. We are experiencing a significant increase in bookings for visa-free destinations such as Singapore, Thailand and Malaysia, but also for destinations such as Japan, South Korea, Saudi Arabia, the UAE, Turkey, the Maldives and Europe," reports Lydia Li, Deputy General Manager of Messe Berlin Shanghai. Tourism expectations are being shaped by the generation born in the 1990s: "Younger Chinese people expect authentic experiences, personalised service and high-quality digital offerings when travelling," observes Li.

While international demand is characterised by dynamism and growth, the cards are being reshuffled in many places on the supplier side. In Germany, the winners of the recent bankruptcy of Germany's third-largest tour operator FTI are TUI and Dertour, who, as number one and two in the market, are endeavouring to divide up the insolvent provider's market share among themselves. Even in the acute phase of the bankruptcy, almost all tour operators tried to win over the FTI holidaymakers temporarily stranded in holiday resorts with enticing offers.

Market leader TUI in particular wants to flex its muscles and expand considerably. Up to 150,000 additional places are to be made available for holidaymakers this winter. In addition to traditional holiday destinations, the tour operator is also targeting new capacity in sub-Saharan destinations such as Kenya, Tanzania and Zanzibar. At the end of June, the group also announced its withdrawal from the German Travel Association (DRV). The Hanover-based company believes that in future it will be better able to assert its lobbying interests vis-à-vis Berlin and Brussels on its own than within the industry association.

Robust growth and influencing European competition and digital legislation appear to be essential for established tour operators such as TUI to be able to stand up to international booking platforms. According to a study by the Centouris Institute, 56.6 per cent of German holidaymakers will book their trips exclusively online by 2023 - a long-term trend from which companies such as Booking or Airbnb will benefit far more than traditional providers. So far, it is primarily the European Union's competition rules that have limited the dynamic expansion of these players. In June, under pressure from Brussels, Booking abandoned its so-called best price clause across Europe, meaning that hotels are no longer obliged to offer at least as favourable a price on Booking as on their own website.

However, the growing market power of the booking platforms can hardly be slowed down by such point victories. Digital companies such as Booking are working on new sales and marketing strategies at various levels and are thus tirelessly gnawing away at the market shares of traditional providers. At Booking, for example, the proportion of bookings where a second service is booked in addition to the hotel is constantly increasing. According to Booking CEO Glenn Fogel, this was in the "high single digits" in the first quarter of the year and 50 per cent higher than in the same period last year.

Digital Platforms and AI: Reshaping the Future of Travel Bookings

But even beyond such snapshots, there is much to suggest that the digitalisation of the travel business has only just begun and that further upheavals are imminent. This can be seen when looking at China, for example, where social media platforms are already dominating the tourism industry. "China's consumers, as well as travel agencies and other providers, make extensive use of platforms such as WeChat for travel planning and booking. Companies that want to get involved in the Chinese market can hardly avoid WeChat," reports Lydia Li. The use of AI chatbots is also increasingly becoming part of everyday life in China's tourism industry: "AI will revolutionise the business," the expert believes. (see also podcast: Trendcast: China Travel Market)

Against this backdrop, it seems only a matter of time before a company like Google becomes more involved in the tourism market. The US company is working intensively on its "AI Overview" programme, a further development of the existing Google search functions. Using artificial intelligence, relevant information is to be extracted from websites, summarised and displayed above the other results as a direct response to the search query. In terms of the tourism business, this could mean that Google's AI will present detailed, highly individualised travel packages in future, making further holiday searches largely superfluous. "AI Overview" is not yet ready for the market, as artificial intelligence does not yet provide realistic answers in all cases. AI queries are also computer-intensive and involve high costs for the provider. In contrast to conventional Google search queries, the monetisation of "AI Overview" via advertising space marketing has also not yet been tried and tested. However, such obstacles should not be overemphasised. There is no doubt that artificial intelligence will take the marketing and distribution of goods and services to a new level in the not too distant future. The travel industry will also have to prepare for this.

Text by Martin Jahrfeld