German Travel Consumer Report: Outbound and Domestic Travel. By Alex Hadwick

Transcription

1 German Travel Consumer Report: Outbound and Domestic Travel By Alex Hadwick

2 German Travel Consumer Report: Outbound and Domestic Travel Disclaimer The information and opinions in this report were prepared by EyeforTravel Ltd and its partners. EyeforTravel Ltd has no obligation to tell you when opinions or information in this report change. EyeforTravel Ltd makes every effort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. In no event shall EyeforTravel Ltd and its partners be liable for any damages, losses, expenses, loss of data, loss of opportunity or profit caused by the use of the material or contents of this report. No part of this document may be distributed, resold, copied or adapted without EyeforTravel s prior written permission. FC Business Intelligence Ltd 2018 Authors: Alex Hadwick, Head of Research, EyeforTravel Ltd. German Travel Consumer Report

3 About EyeforTravel About EyeforTravel We bring together everyone in the travel industry, from small tech start-ups to international hotel brands, to form a community working towards a smarter and more connected travel industry. Our mission is to be the place our industry goes to share knowledge and data so that travel and tech brands can work collaboratively to create the perfect experience for the modern traveler. We do this through our network of global events, our digital content, and our knowledge hub - EyeforTravel On Demand. Our Values We believe the industry must focus on a business and distribution model that always puts the customer at the center and produces great products. However, to deliver an outstanding travel experience, the strength, skills, and resources of all partners in the value chain must be respected and understood. At EyeforTravel we believe the industry can achieve this goal by focusing on a business model that combines customer insight with great product and, most importantly, places the traveler experience at its core. At our core, we aim to enable the above by valuing impartiality, independent thought, openness and cooperation. We hope that these qualities allow us to foster dialogue, guide business decisions, build partnerships and conduct thorough research directly with the industry. These principles have guided us since 1997 and will continue to keep us at the forefront of the industry as a vibrant travel community for many more years to come. Our Services Our events are the heart of EyeforTravel. These draw in experts from every part of the travel industry to give thought provoking presentations and engage in discussions. It is our aim that every attendee takes back something new that can help their business to improve. This might be in the fields of consumer research, data insights, technological trends, or marketing and revenue management techniques. Alongside this we provide our community with commentary, reports, white papers, webinars and other valuable expert-driven content. All of this can be accessed through one place - the On Demand subscription service. We are always expanding the content we create, so please get in touch if you want to write an article for us, create a white paper or webinar, or feature in our podcast. EyeforTravel in Numbers 80,000+ database contacts 2,000+ annual event attendees 100,000+ monthly online reach 1,000+ online conference presentations German Travel Consumer Report

4 CONTENTS Contents About EyeforTravel...3 Our Values....3 Our Services....3 EyeforTravel in Numbers....3 List of Figures and Tables....5 Introduction Outbound Travel Overview Passports in Circulation Historical Outbound Travel Most Popular Destinations Most Popular Destinations by Region within Germany Spending Patterns Domestic Travel Overview Domestic Travel Patterns Domestic Travel Transportation and Accommodation...24 References German Travel Consumer Report

5 List of figures / tables List of Figures and Tables Figure 1: Share of Nights Spent During Outbound Holidays of Europeans, by Country of Residence of the Tourist, Figure 2: Household Final Consumption Expenditure on Accommodation and Restaurant Services, 2012 to 2017, Price-Adjusted, Chain-Linked Volume Data (EUR Billions)...9 Figure 3: Spending Per Trip by Age...10 Figure 4: Expected Travel Destinations...11 Figure 5: DRV Estimates of German Trips of Five Days or More, 2011 to Figure 6: FUR Most Popular Destinations for Journeys of Five Days or More...12 Figure 7: Stiftung für Zukunftsfragen Most Popular Destinations for Main Vacations in Figure 8: Destinations with Falling Arrivals from Germany in Figure 9: Destinations with Rising Arrivals from Germany in Figure 10: Destinations with Rising Arrivals from Germany in Figure 11: Interest in Search Term Urlaub Spanien Figure 12: Interest in Search Term Urlaub Mallorca...16 Figure 13: Interest in Search Term Urlaub Griechenland...16 Figure 14: Interest in Search Term Urlaub Kreta Figure 15: Interest in Search Term Urlaub Türkei Figure 16: Interest in Search Term Urlaub Kroatien...17 Figure 17: Interest in Search Term Urlaub Italien Figure 18: Interest in Search Term Urlaub Thailand...17 Figure 19: Interest in Search Term Urlaub Deutschland...17 Figure 20: Interest in Search Term Kreuzfahrt Figure 21: Spending on Last Vacation Reported by German Consumers...18 Figure 22: Spending for Domestic and International Trips...18 Figure 23: Arrivals at Tourist Accommodation Establishments by German Tourists...20 Figure 24: Nights Spent at Tourist Accommodation Establishments by German Tourists...21 Figure 25: Overnight stays per 1,000 inhabitants Figure 26: Domestic Destinations Selected by German Travelers for Their Main Vacation Trip in 2016 and Figure 27: Gopili Transport Market Share for Domestic Intercity Journeys...24 Table 1: Spending Per Trip by Age...10 Table 2: Destinations with Rising Arrivals from Germany in Table 3: What Proportion of Your Travel Budget Did You Spend on Each of the Following?...19 Table 4: Arrivals and Nights Spent at Tourist Accommodation Establishments by German Tourists...21 Table 5: German Arrival and Nights Spent at Domestic Accommodation Establishments in 2016 by State...22 Table 6: Overnight stays per 1,000 inhabitants German Travel Consumer Report

6 introduction Introduction It wasn t long ago that the casual observer would have said that the Eurozone seems to be struggling from one crisis to the next. The 2008 global financial crash left Europe s banks in tatters and vast debt burdens for a variety of economies, in some cases requiring bail-outs. This was followed by Britain rejecting the EU in its 2016 referendum. However, as we head into 2018, Europe is now seeing the highest growth and consumer and business confidence in 10 years, with Germany at this recovery s beating heart. The engine of a revived Europe is the German economy. This has had a remarkable performance over the entire post-recession period. After a brief series of rises in late 2008 and 2009, unemployment in Germany has steadily fallen quarter after quarter to just below 6% in Q4 2017, which marks it as the lowest point since Reunification. Similarly, labor force participation comfortably stands north of three quarters of the working age population, putting it ahead of all other major European economies aside from the UK. Unlike the UK, however, Germany has also seen steady increases in average real wages, which are now significantly ahead of pre-crisis levels. It really is worth shouting about and makes Germany a key market in the global travel and tourism trade. This economic success, has led Germany to become an extremely well-developed market, with a stable rate of around eight of 10 consumers undertaking trips each year since the Recession. However, this saturation and Germans cautiousness and risk aversion leaves the market open to potential shocks. In 2016 and to a much lesser extent in 2017, Germans retreated from a variety of destinations, most notably Turkey. The outlook appears much brighter in 2018, with not just German but European growth and consumer confidence in great shape. German consumers finally feel free to spend and early booking indicators appear extremely positive. Similarly, in the long term, Germans of all ages are more interested in travelling than ever before and their growing wealth will help keep Germany s as the third largest international travel market in the world out into the 2020s. Alex Hadwick Head of Research, EyeforTravel Ltd German Travel Consumer Report

7 Outbound Travel 1. Outbound Travel Key points Germany is Europe s tourism powerhouse: It alone accounted for 30% of EU-28 consumer s overnight stays in foreign countries. This is equivalent to 771 million nights, comfortably ahead of the next biggest market for that year, the UK, at 564 million nights. This makes it a very mature travel market but crises have dampened demand, however. In 2016, security crises caused crashing German arrivals to several key destinations: Arrivals to Turkey fell by 30.1%, Egypt by 35.9% and Tunisia by 40.9%. This meant international departures suffered and Germans shifted over to established destinations around the Mediterranean and Baltic but 2017 has seen better growth and there is still long-term potential for growth. In 2017 there has been slightly slower German arrivals growth to Spain and Portugal than in Growth was still strong at 6.1% and 8.3% in the first 11 and 10 months of the year, respectively. Instead, the highest growth rates have been in the Eastern Mediterranean, stretching across the Balkans, Greece, and Mediterranean islands. Southeast Asia has also seen very good growth. Declines in arrivals to Turkey also slowed in 2017 to -7.9% and it is expected that arrivals will grow by more than 15% in Tunisia should also improve markedly as TUI and Thomas Cook restart charters to the country. In the longer term, German interest in international travel should continue to increase: The proportion of Germans reporting that a vacation was highly significant to them had risen from 46% in 2012 to 66% in late Visa expects the amount that Germans spend on international travel to grow 32% between 2015 and 2025, meaning it will still be the world s third largest outbound travel market at that point. German spending on travel has also grown: Household expenditure on hotel and restaurant services has risen 14.7% from 2009 to 2017 according to Destatis and FUR estimates trip spending rose 11.3% from 2011 to In our survey, we found that Germans are most likely to spend less than EUR2,000 on their vacations, with 72.8% reporting that they spent less than this on their last trip. The median spending level for a trip was between EUR1,000 and EUR1,499, with 60.5% reporting that they spent this much or less. We estimate that Germans on average spent around EUR1,250 on outbound trips and EUR550 on domestic trips. Whereas 26.9% of outbound only trips saw spending of more than EUR2,000, just 6.7% of domestic trips saw the same level of spending. The Stiftung für Zukunftsfragen estimates an average spend of EUR1,193 per trip and the DRV estimates around EUR1,050. FUR s 2017 Resiseanalye estimates that EUR600 was spent per person on domestic trips, and EUR1,147 is spent on international trips. Beach vacations are the most popular type of vacation and hotels are the largest budget component for German Travel Consumer Report

8 Outbound Travel German travelers, taking up just under a third of budgets. Germans prefer to spend their euros on relaxing vacations above all others. Interest in Spain and the Spanish islands is strongest in states along the western border and Schelswig- Holstein. In particular, the cities in the crescent from Cologne to Osnabrück sees strong search interest relative to urban areas in the rest of the country, with Cologne a city that has high interest across multiple vacationrelated search terms. This is generally switched when it comes to destinations in the Eastern Mediterranean. The three former East German states of Mecklenburg-Vorpommern, Saxony-Anhalt and Thuringia trend higher for Greece, Crete and Turkey. Younger travelers are more interested in travel to the Eastern Mediterranean and older travelers to the Western Mediterranean, particularly the Canary Islands, according to TUI. Interest in long-haul destinations is concentrated in high income areas, with Bavaria and Baden-Württemberg over indexing for searches for Thai vacations, for example. 1.1 Overview The German outbound market is vast and, as such, is the powerhouse of the European Union tourism industry. Such is the scale of Germany s outbound market that in 2016 it accounted for 30% of EU-28 consumer s overnight stays in foreign countries. This is equivalent to 771 million nights, comfortably ahead of the next biggest market for that year, the UK, at 564 million nights. Similarly, the European Commission estimates that Germany recorded the highest level of expenditure on international travel, totaling EUR 72.1 billion in 2016, followed by the United Kingdom (EUR 58.4 billion) and France (EUR 36.5 billion). (European Commission, 2017c). This size does also illustrate why the German outbound market is relatively saturated. Combine this fact with Germans natural risk-aversion and enjoyment of domestic tourism and the end result is an outbound market that can be vulnerable to external factors in popular tourist destinations, such as we saw in 2016 and to a lesser degree in Figure 1: share of nights spent during outbound holidays of europeans, by country of residence of the tourist, 2016 Rest of EU 13% Austria 3% Sweden 3% Germany 30% Italy 3% Belgium 4% Poland 4% Spain 4% The Netherlands 6% Source: European Commission, 2017c France 8% United Kingdom 22% German Travel Consumer Report

9 Outbound Travel Terrorist attacks and instability in the Middle East, combined with the migrant crisis occurring at that time, left many German consumers concerned about the overall security picture and of travelling to some of their favorite destinations across the Mediterranean region. Turkey was the hardest hit by this change in behaviors but it was not alone with North African destinations also suffering, as has the US (see Section 1.4). Indeed, a 2017 survey found that Germans perceive the US as one of the five most dangerous destinations in the world (Travelzoo, 2017). Instead, German consumers switched over to tried and tested destinations around the Baltic, Spain, Greece and the Mediterranean islands appears to have borne the brunt of declines, with 2017 indicators appearing to show more positive demand but overall there was a continuation of German caution around certain destinations and strong growth for the same key Mediterranean destinations that performed well in The FUR s 2017 Reiseanalyse noted that: For many people in Germany the terrorist attacks in recent years play a role when thinking of their holiday trips % feel that terrorism influences their holiday planning. Of those, many feel generally concerned (50%) or are planning to be particularly careful in their holiday destination (27%). 41% do not wish to go to an Islamic country, 18% avoid their preferred destination. (FUR, 2017) Although this appears to have temporarily knocked German outbound patterns back in 2016 and slightly subdued them in 2017, this is not to say that there is not potential for future growth in the German outbound market or that it should be sidelined in the minds of the travel industry. Whilst the overall percentage of Germans travelling per year is likely to hover around 80%, there is scope for more journeys per person to more destinations and to spend more as they do so. The German consumer is in particularly rude health. Growing productivity and incomes mark the country s economy out as being particularly solid in the face of recent turmoil and notably good performer among the G7 on both measures. This strength is also already coming from a position of greater consumption power on the part of the German consumers, as noted in Section 1.2. Additional spending power will feed into travel consumption, especially when combined with the record highs in consumer confidence. According to official measures, following the effects of the Recession, spending on accommodation and restaurant services has trended upwards. In priceadjusted chain linked terms (using 2010 as a base), Figure 2: household final consumption expenditure on accommodation and restaurant services, 2012 to 2017, price-adjusted, chain-linked volume data (EUR billions) Accommodation and restaurant services YoY percentage change % 3% 2% 1% 0% -1% -2% -3% -4% -5% Source: Destatis, 2018d German Travel Consumer Report

10 Outbound Travel Figure 3: Spending per trip by age Less than ,000-1,499 1,500-1,999 2,000-2,999 3,000-3,999 4,000-4,999 5,000-6,999 7,000-9,999 More than 10, % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: EyeforTravel s German Travel Consumer Survey, 2016 Table 1: Spending per trip by age Less than EUR500- EUR1,000- EUR1,500- EUR2,000- EUR3,000- EUR EUR5,000- EUR7,000- More than EUR ,499 1,999 2,999 3,999 4,999 6,999 9,999 EUR10, % 23.8% 16.6% 10.3% 8.5% 5.1% 3.7% 1.6% 1.7% 3.5% % 22.1% 16.7% 13.2% 14.3% 7.5% 2.0% 2.9% 1.3% 1.8% % 23.2% 20.3% 14.0% 13.3% 7.2% 3.5% 2.2% 1.3% 1.1% Source: EyeforTravel s German Travel Consumer Survey, 2016 household expenditure of these services has risen 14.7% from 2009 to 2017 (Destatis, 2018d). We can expect the rate of spending growth on travel to accelerate further in 2018 if overall forecasts about the economic situation are accurate. The rate of outbound growth should also be helped by the excellent Eurozone growth relative to recent performance, which will help loosen the purse strings of German consumers who have been wary about spending in the face of consistent crises around the euro area. Forward booking indicators from the last quarter of 2017 and in the first month of 2018 appear excellent and broad-based in terms of destinations being booked, reversing the trends seen in 2016 and In the longer term, the number of Germans interested in travel generally and in travelling abroad has followed a long-term upwards trend. A large-scale survey by Hamburger Stiftung für Zukunftsfragen found that the proportion of Germans reporting that a vacation was highly significant to them had risen from 46% in 2012 to 66% at the time of the survey in late Furthermore, the survey also found that in 2017 the average time Germans spent on their main vacation lengthened and spending rates increased (Stiftung für Zukunftsfragen, 2018). Visa expect the amount that Germans spend on international travel to grow 32% between 2015 and 2025, meaning it will still be the world s third largest outbound travel market at that point (Visa, 2016) The growing number and wealth of German pensioners should also help outbound rates. In booking patterns released by TUI, older travelers were more likely to take trips of two weeks or longer than younger travelers, and Expedia found that Baby Boomers also took the longest trips and were the least concerned about budget. In the latter study, whilst 69% Millennials and 54% of Generation X said German budget was a primary factor when booking their last trip, just 46% of Baby Boomers said the same, suggesting that they already have higher disposable German Travel Consumer Report

11 Outbound Travel Figure 4: Expected travel destinations Both 18.3% International 50% Source: EyeforTravel s German Travel Consumer Survey, 2016 Germany 31.7% income than younger travelers and are more willing to use it for travel (Tui, 2018, Expedia, 2017). We also found that older German travelers were high spenders. In our survey those aged more over 55 were the least likely age group to spend under EUR999. Whereas a quarter of consumers under 35 spent less than EUR500 on their trip, just 14% of over 55s had such a low trip spend. Critically, these older consumers also have increasing leisure time that they can use for travel and are set to become Germany s largest demographic age group by 2030 according to demographic projections (Destatis, 2018e). When we asked about plans for 2017, 68.3% of those planning a journey with at least one overnight stay in the next 12 months said that they were expecting to take a journey abroad. Half of those consumers were expecting to take purely vacations outside Germany, compared to just 18.3% who were planning only to vacation domestically, supporting the idea that German consumers were looking outwards more in 2017 than they were in Passports in Circulation According to Destatis, Germany had 82.5 million inhabitants by the end of 2016 of which an estimated 30 million have a passport (WAZ, 2016). This mean that about 36% of the population have a German passport. To put this into context, this is a relatively low percentage compared to 75% of the population in the UK and closer to the 39% estimated in the US. However, it is worth remembering that European citizens within the Schengen area do not need to carry a passport as they can travel freely anywhere in this area, which extends across Western Europe. Germans can also travel to Egypt, Georgia, Turkey and on organized tours to Morocco and Tunisia using their ID cards, which are in much wider circulation than passports. Therefore, the relatively low level of German passport holding is only limiting for German long-haul travel and helps to explain the German preference for the above destinations. We can expect the number of passports in circulation to rise as Germans look to travel to destinations further afield. 1.3 Historical Outbound Travel German outbound travel trends have seen a divergence between the level of spending (see Section 1.5) and the number of trips taken abroad over the last decade. Although spending has increased, albeit quite erratically, the number of trips has remained relatively static. According to the DRV, the number of trips of five days duration or more barely changed from 2011 to 2016, with 2011 seeing 47.8 million trips in their estimates, compared to 48.1 million trips in 2016 (DRV, 2018). Our estimates suggest that international trip numbers are higher than in these estimates but it seems unlikely that 2016 will have seen strong growth in international travel. Spending, on the other hand, appears to be on the up, growing steadily across the same period (see Sections 1.1 and 1.5 for more). The differential suggests that most Germans who can afford to travel are now doing so and instead of more journeys, more spending has been the recent trend. After several years of decreasing trip lengths, days spent on the main vacation appear to be growing now. The Stiftung für Zukunftsfragen found that journey length German Travel Consumer Report

12 Outbound Travel Figure 5: drv estimates of German trips of five days or more, 2011 to 2016 Millions) Number of trips of five days or more YoY percentage change % 6.0% 5.0% % % 2.0% 1.0% 0.0% -1.0% -2.0% Source: DRV, % for the main vacation has grown for three years to a ten year high of 13 days. The DRV also reports that vacation trips have reached an average of 13.2 days (Stiftung für Zukunftsfragen, 2018; DRV, 2018). 1.4 Most Popular Destinations Historically Germans travel abroad for sun and relaxation, with the Mediterranean being the destination of choice. Initially this was largely based in Spain and Italy but Germans have since spread out to be core constituents of numerous holiday markets around the region, such as Egypt, Tunisia and Turkey. This trend took a major hit in 2016 and 2017, with German consumers returning to destinations they felt safe with around the Mediterranean and Baltic. This occurred as a result of German consumers concerns about the security of a number of key destinations, principally, Egypt, Turkey and Tunisia. There also appears to have been a Trump effect at play for the US, which performed poorly in The effects of terrorism and instability on German travel consumers perception of international trips appear to be weakening now and the largest effect was felt in Figure 6: fur most popular destinations for journeys of five days or more 16% 14.8% 14% 12% 10% 8% 8.2% 6% 4% 2% 5.6% 4.6% 3.5% 3.2% 2.6% 2.6% 2.0% 1.7% 0% Spain Source: FUR, 2017 Italy Turkey Austria Greece Croatia France The Netherlands Poland Denmark German Travel Consumer Report

13 Outbound Travel Figure 7: Stiftung für Zukunftsfragen most popular destinations for main vacations in % 13.7% 12% 10% 8% 7.7% 6% 4% 2% 3.9% 3.6% 3.3% 3.1% 3.0% 2.9% 2.8% 1.8% 0% Spain Italy Source: Stiftung für Zukunftsfragen, 2018 Austria Turkey Croatia Greece Scandinavia France Benelux Poland 2016, with 2017 proving to be a better year for German outbound travel and 2018 seeing further improvement. In 2017 destinations that were in free-fall for arrivals from Germany appeared to hit a relative floor or bounce back and destinations that were seeing strong arrival growth in 2016 largely continued their good performance. The recent trends leave Spain by far and away the dominant outbound destination for Germans, with Mallorca being traditionally the most visited part, giving it the nickname the 17th state of Germany. FUR estimates that the Spain s share of all journeys of five days or more increased from 13.1% in 2015 to 14.8% in The Stiftung für Zukunftsfragen s 2017 results also placed Spain at the top, with 13.7% of their respondents answering that Spain would be their main vacation destination in The remaining destinations are all European, with Italy coming second in both results, followed by Turkey, Austria, Greece and Croatia, emphasizing the German s desire to seek out sunnier climes (see figures 6 and 7; FUR, 2017, Stiftung für Zukunftsfragen, 2018). Looking at arrival to individual countries, destinations in close proximity to unstable areas or suffering from Figure 8: destinations with falling arrivals from Germany in % Tunisia -35.9% Egypt -30.1% Turkey -10.4% US -45% -40% -35% -30% -25% -20% -15% -10% -5% 0.0 Source: fvw, 2018a German Travel Consumer Report

14 Outbound Travel domestic tourism were hardest hit in Tunisia fell by -40.9%, Egypt by 35.9%, and Turkey by 30.1%. Germans appeared turned off by the political situation in the US, which also experienced a double-digit fall in arrivals in 2016 of -10.4% (fvw, 2018a). Turkey is the most significant of these, as even after the falls it remains one of the most significant markets for German outbound travel. Arrivals to the country continued to fall in 2017, declining by a further -7.9% YoY according to the Turkish Tourism Ministry (Turkish Ministry of Culture and Tourism, 2018). This downturn led Germans to look at destinations closer to home or alternatives that closely resemble their favorite countries. Top performers in terms of percentage growth were to be found in: Scandinavia: Finland +17.2%, Norway +15.6%, Denmark +5.6%. Canada +12.8% Bulgaria +32.8% Beach vacation destinations around the Mediterranean: Portugal +11%, Spain +8.7% In neighboring Austria, +7%, and the Netherlands, 8% (fvw, 2018a). In 2017, German travelers broadly continued these trends but became more adventurous, with a wide number of destinations reporting strong arrivals growth. Growth eased off slightly in Spain and Portugal, which have recorded growth of 6.1% and 8.3% in the first 11 and 10 months of the year, respectively. Higher growth rates have been recorded across the Eastern Mediterranean, stretching across the Balkans, Greece, Mediterranean islands and Southeast Asia (see Figure 10). This appears to fit with information released by the Stiftung für Zukunftsfragen and TUI, with the former reporting a strong growth in interest in travel by younger cohorts and the latter reporting that younger travelers are more likely to favor the Eastern Mediterranean (Stiftung für Zukunftsfragen, 2018; TUI, 2018). The biggest winner was Cyprus, which recorded a 52.2% increase in German arrivals YoY (TourMIS, 2018) Overall, it seems there was a much stronger outbound market in 2017 than in 2016, but still reticence remained among consumers to return to troubled destinations noted earlier. Looking forward to 2018, this concern will further fade and the environment improve. Thomas Cook and TUI have announced that they have returned or will return to Tunisia in 2018 and Turkey is showing good forward booking indicators. Expectations are for arrival growth of 15% to 20% into the country from the German market in 2018, which seems realistic as long as the political and security situation does not deteriorate (Reuters, 2018). Thus far TrevoTrend data notes very strong growth of Figure 9: Destinations with rising arrivals from Germany in % 32.7% 30% 25% 20% 15% 10% 5% 17.2% 15.6% 12.8% 11.7% 11.0% 8.7% 8.0% 7.0% 7.0% 5.6% 0% Bulgaria Source: fvw, 2017 Finland Norway Canada Greece Portugal Spain The Netherlands Slovenia Austria Denmark German Travel Consumer Report

15 Outbound Travel Figure 10: Destinations with rising arrivals from Germany in % 50% 40% 30% 20% 10% 0% Cyprus Montenegro Slovenia Malta Serbia Thailand Greece Iceland Romania Sources: TourMIS, 2018; Republic of Cyprus Statistical Service, 2018; Tornos News, 2018a; Instituto Nacional de Estadistica, 2017; National Statistical Institute of Bulgaria, 2018; Observatoire du Tourisme du Maroc, 2017; ATTA Thailand, 2018 Belgium Morocco Netherlands Finland Slovakia Portugal Hungary Poland Spain Bulgaria more than 25% YoY for forward bookings to hotels from the German market in November 2017, December 2017 and January 2018 for Turkish hotels, as well as good forward demand for Egypt and Tunisia in these months (fvw, 2018b). For more on expected outbound travel patterns in 2018, head to Section Most Popular Destinations by Region within Germany According to Google data there appears to be an overall divide when it comes to interest in German tourists most popular destinations. In general, Western Mediterranean destinations generate more interest from states in the western half of Germany and destinations in the Balkans and Eastern Mediterranean are searched more frequently by those living in states in the eastern half of the country. Interest in Spain and the Spanish islands is strongest in states along the western border and Schelswig-Holstein. In particular, the cities in the crescent from Cologne to Osnabrück sees strong search interest relative to urban areas in the rest of the country, with Cologne a city that comes across multiple terms with high interest. This is generally switched when it comes to destinations in the Eastern Mediterranean. The three former East German states of Mecklenburg-Vorpommern, Saxony-Anhalt and Thuringia trend higher for Greece, Crete and Turkey. Interest in Italy as a vacation destination appears to be more strongly based on proximity, with the southern Table 2: destinations with rising arrivals from Germany in 2017 Cyprus 52.2% Jan-Dec Montenegro 29.7% Jan-Nov Slovenia 27.1% Jan-Nov Malta 23.1% Jan-Dec Serbia 22.3% Jan-Dec Thailand 22.2% Jan-Dec Greece 18.3% Jan-Nov Iceland 17.3% Jan-Dec Romania 15.5% Jan-Nov Belgium 14.3% Jan-Sep Morocco 14.0% Jan-Oct Netherlands 13.3% Jan-Oct Finland 11.0% Jan-Nov Slovakia 9.0% Jan-Nov Portugal 8.3% Jan-Oct Hungary 7.5% Jan-Nov Poland 7.3% Jan-Nov Spain 6.1% Jan-Nov Bulgaria 4.3% Jan-Dec Sources: TourMIS, 2018; Republic of Cyprus Statistical Service, 2018; Tornos News, 2018a; Instituto Nacional de Estadistica, 2017; National Statistical Institute of Bulgaria, 2018; Observatoire du Tourisme du Maroc, 2017; ATTA Thailand, German Travel Consumer Report

16 Outbound Travel Figure 11: Interest in search term urlaub Spanien Figure 12: Interest in search term urlaub Mallorca Figure 13: Interest in search term urlaub Griechenland Figure 14: Interest in search term urlaub Kreta Figure 15: Interest in search term urlaub Türkei Source: Google Trends, 2018 states of Bavaria and Baden-Württemberg generating noticeably more search engine traffic for the country than any other states. These two states are also noticeably more likely to search for long-haul destinations in Asia and the Americas. The trend can be seen in Figure 18 for interest in Thailand. This is likely driven by the high wealth of both of these states relative to the rest of Germany, allowing consumers to shop for vacations in more exotic locations. When it comes to the search term Kreuzfahrt cruise vacations interest is focused in the North of Germany. The most search interest, in order, is generated in Mecklenburg-Vorpommern, Schleswig-Holstein, Bremen, Lower Saxony, and Brandenburg (see Figure 20). Search data is taken from January 2016 to January Spending Patterns High income per capita and strong purchasing power make Germany the number three spender on German Travel Consumer Report

17 Outbound Travel Figure 16: Interest in search term urlaub Kroatien Figure 17: Interest in search term urlaub Italien Figure 18: Interest in search term urlaub Thailand Figure 19: Interest in search term urlaub Deutschland Figure 20: Interest in search term Kreuzfahrt Source: Google Trends, 2018 international tourism in the world. In contrast to its export manufacturing, tourism is an industry where Germany is a net exporter, spending far more abroad than international tourists do in Germany. In recent years Germany s travel spending has returned to growth following the Recession. According to the FUR s Reiseanalyse the level of spending on journeys has risen by 11.3% from 2011 to 2016, with spending on journeys of over 5 days, which are overwhelmingly international, growing at a faster rate than trips of two to four days. However, this growth has been erratic, with FUR estimating that in 2013 and 2015 spending on travel barely shifted at all, in stark contrast to good growth in 2012 and They estimate that spending grew by just 1% from 2015 to 2016 (FUR, 2017). In our survey, we found that Germans are most likely to spend less than EUR2,000 on their vacations, with 72.8% reporting that they spent less than this on their last trip. The median spending level for a trip was EUR1,000 to EUR1,499, with 60.5% reporting that German Travel Consumer Report

18 Outbound Travel Figure 21: Spending on last vacation reported by German consumers 25% 23.1% 20% 19.9% 17.6% 15% 12.3% 11.7% 10% 6.5% 5% 3.1% 2.2% 1.5% 2.3% 0% Less than ,000-1,4999 1,500-1,999 2,000-2,999 3,000-3,999 4,000-4,999 5,000-6,999 7,000-9,999 More than 10,000 Source: EyeforTravel s German Travel Consumer Survey, 2016 they spent this much or less and nearly a quarter reporting that they spend EUR500 to EUR999. This appears to fit other data, with the Stiftung für Zukunftsfragen reporting in their 2017 survey results that Germans spent an average of EUR1,193 per trip (Stiftung für Zukunftsfragen, 2018). DRV estimates are slightly lower but still within this category at around EUR1,050 (DRV, 2017). Breaking this down further, when we separate out respondents who reported that they only took an international journey or only a domestic trip in the previous 12 months we can see divergent spending behavior. Median spending for those who went on only domestic vacations was EUR500 to EUR999, compared to a median of EUR1,000 to EUR1,499 for those who solely traveled abroad. Whereas 26.9% of outbound only trips saw spending of more than EUR2,000, just 6.7% of domestic trips saw the same level of spending (see Figure 22). We estimate that Germans households on average spend around EUR1,250 per outbound trip and EUR550 per domestic trip. Figure 22: Spending for domestic and international trips 40% Vacation spending on domestic trips only Vacation spending on international trips only 35% 30% 25% 20% 15% 10% 5% 0% Less than ,000-1,4999 1,500-1,999 Source: EyeforTravel s German Travel Consumer Survey, ,000-2,999 3,000-3,999 4,000-4,999 5,000-6,999 7,000-9,999 More than 10,000 German Travel Consumer Report

19 Outbound Travel Table 3: What proportion of your travel budget did you spend on each of the following? Gen Z Millennials Gen X Boomers Hotel 30% 32% 32% 32% Flight 18% 18% 18% 14% Food 15% 14% 16% 18% Attractions 10% 11% 11% 9% Transportation 10% 8% 7% 8% Shopping 9% 8% 9% 8% Home sharing 5% 6% 5% 7% Other 3% 4% 3% 5% Source: Expedia, 2017 FUR s 2017 Resiseanalye estimates that EUR600 was spent per person on domestic trips, and EUR1,147 is spent on international trips, (FUR, 2017). When it comes to where this money is spent, the relaxing beach holiday remains king for Germans. Germans report relaxation as by far their highest priority when they travel, with 63% of Millennials, 65% of Generation X travelers and 61% of Baby Boomers reporting that they had gone on a relaxing vacation in the last year according to a 2017 survey by Expedia. This compares to 28%, 29% and 20% of those same generations that reported going on an activity based vacation (Expedia, 2017). GfK breakdowns of German purchasing power dedicated to vacations per inhabitant place Mediterranean beach vacations as the largest single category, at an average of EUR161 per person, with a further EUR40 per person going to long-haul beach trips. City trips received EUR57 per person, cruises EUR60 per person, but sport, wellness and activity travel saw a lowly EUR34 per inhabitant in 2017 (GfK, 2017). surveys from 2016 and 2017 found that Germans are twice as likely than the Brits to use a private transfer service from home to their departure airport 30% compared with 14% of Brits and 20% of Germans say using a baggage service to transfer luggage from home to airport is important to them, compared with only 5% of Brits. They also found that they may be an opportunity to drive revenue through localized experiences for German travel consumers, with 60% reporting that they were very interested in these types of activities (Expedia, 2017; Thomas Cook, 2017). Expedia s 2017 survey results for German travelers show that across generations hotels are the preferred accommodation choice and easily the single largest expenditure category, at more than 30% for all ages. Flights and food are the next biggest expenses, with Baby Boomers prioritizing food to a greater degree, at 18% of their last trip s spending, compared to 14% for Millennials. Germans also spend 7% to 10% of their trip budget on transportation, which appears to be an area where Germans like to splash their cash. Thomas Cook German Travel Consumer Report

20 Domestic travel 2 Domestic Travel Key points Domestic travel is extremely popular in Germany, with more trips taken at home than internationally. These trips are shorter than international trips and appear to be reducing in length in recent years. Lower length, costs and spending rates makes the domestic market smaller than for outbound travel but more attractive for German consumers on a cost basis. The German domestic market has performed well since the Recession. This has been helped by the recent crises around the Mediterranean, which made domestic tourism more attractive as Germany is seen by far as the most secure travel option among Germans. Arrivals from German tourists at domestic accommodation providers averaged a growth rate of more than 3% since 2010 and the number of night spent has grown by more than 2%. The most popular states for domestic travel are in the north and south of the country and this shows no signs of changing in the near future. 2.1 Overview Germans love to holiday within their own country, taking more journeys at home than abroad, even with their position as one of the world s largest outbound markets. Furthermore, the growth rate of domestic travel has been solid since the Recession, with arrivals from German tourists at domestic accommodation providers averaging a growth rate of more than 3% since 2010 and Figure 23: Arrivals at tourist accommodation establishments by German tourists 160,000, ,000, ,000, ,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 Arrivals YoY change in arrivals % 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% Destatis, 2017c German Travel Consumer Report

21 Domestic travel Figure 24: Nights spent at tourist accommodation establishments by German tourists Nights spent at tourist accommodation establishments 400,000, ,000, ,000, ,000, ,000, ,000, ,000,000 50,000,000 YoY change in nights spent at tourist accommodation establishments 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% Jan- Nov Destatis, 2017c % the number of nights spent growing by more than 2% according to Destatis (Destatis, 2017c). Even the recession failed to quell rising rates, with Germans preferring to instead cut back on their international travel at times of economic and political uncertainty and look inwards to vacationing closer to home. This gives domestic tourism in Germany real strength and it seems likely that domestic tourism will continue to grow in the medium term, albeit at relatively slow Table 4: Arrivals and nights spent at tourist accommodation establishments by German tourists Arrivals at tourist accommodation establishments YoY change in arrivals Nights spent at tourist accommodation establishments YoY change in nights spent at tourist accommodation establishments % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % January to November % 2.3% Destatis, 2017c German Travel Consumer Report

22 Domestic travel rates, particularly as the outbound environment improves in According to official figures arrivals from Germans to domestic accommodation providers grew by 3.2% in 2016 and across the first 11 months of 2017 by 3.3%. Nights spent grew by 2.8% and 2.3%, respectively (Destatis, 2017c). According to this data, the length of stays for Germans has also been falling over the last few years. From an average stay per arrival, of 2.78 days in 2011, this fell to an average of 2.69 days in 2016 (Destatis, 2017c). Looking forward to 2018, domestic tourism is unlikely to increase see annual percentage growth rates jump, despite the excellent expected performance of the German economy. Confidence amongst German tourists to travel to a variety of previously poorly performing Mediterranean destinations will put more emphasis on international travel and Germans appear to be ready to make more adventurous outings. FUR s results for 2018 reports that 42% of Germans are planning to visit a completely new destination in 2018 and 2% more are considering a long-haul trip than in 2017 at 17% of those surveyed (fvw, 2018c). This greater confidence in international travel will likely mean lower growth in demand for German domestic vacations in 2018, probably leading to slightly shorter domestic trips on average. Nonetheless, domestic vacations are cheaper and even by December 2017, Germany was still easily seen as the safest destination by German consumers. A GfK survey found that 77% feel that the country is generally safe, compared to 49% who consider Spain safe and just 23% who feel the same about the US (The Local.de, 2018). 2.2 Domestic Travel Patterns Germans tend to travel towards either end of their country for their domestic holidays, with the southern German states and the Baltic coast proving to be the most popular according to official data. Just the four states of Bavaria (Bayern), Baden- Württemberg, Mecklenburg-Vorpommern, Schleswig Table 5: German arrival and nights spent at domestic accommodation establishments in 2016 by state 2016 arrivals at accommodation establishments 2016 nights spent at accommodation establishments Share of nights Baden-Württemberg % Bayern % Berlin % Brandenburg % Bremen % Hamburg % Hessen % Mecklenburg-Vorpommern % Niedersachsen % Nordrhein-Westfalen % Rheinland-Pfalz % Saarland % Sachsen % Sachsen-Anhalt % Schleswig-Holstein % Thüringen % Germany Source: (Destatis, 2017d) German Travel Consumer Report

23 Domestic travel Figure 25: Overnight stays per 1,000 inhabitants ,788 2,776 Source: Destatis Genesis, 2018 Table 6: Overnight stays per 1,000 inhabitants 2016 Overnight stays per 1,000 inhabitants 2016 Baden-Württemberg Bayern Berlin Brandenburg Bremen Hamburg Hessen Mecklenburg- Vorpommern Nieder-sachsen Nordrhein-Westfalen Rheinland-Pfalz Saarland Sachsen Sachsen-Anhalt Schleswig-Holstein Thüringen Source: Destatis Genesis, 2018 Holstein accounted for 46.3% of all overnight stays and 41.6% of arrivals made by Germans in their own country in 2016, with Bavaria having the highest number of overnight stays, at a fifth of the total (although it should be noted that is also the largest state; Destatis, 2017d). Furthermore, these are some of the fastest growing regions in terms of both room nights and also arrivals. Across both categories, Schleswig Holstein was the fastest growing region from 2015 to 2016, followed by Hamburg, Bavaria and Niedersachsen (Destatis, 2017d). Using a slightly different measure of overnight stays per 1,000 inhabitants we can see just how important Figure 26: Domestic destinations selected by German travelers for their main vacation trip in 2016 and % 9% 9.0% % 7% 6% 6.9% 6.9% 7.5% 6.1% 5.9% 7.6% 6.4% 5% 4% 3% 2% 3.6% 3.6% 3.1% 1.9% 1% 0% Bayern Mecklenburg- Vorpommern Schleswig- Holstein Niedersachsen Baden- Württemberg Other states Source: Stiftung für Zukunftsfragen, German Travel Consumer Report

24 Domestic travel tourism is to various states and how popular they are among German tourists. Mecklenburg-Vorpommern and Schleswig-Holstein index very highly in this measure, with the former more seeing more than double the number of overnights per 1,000 inhabitants than the latter, which had the next highest rate under this measure. Whereas Mecklenburg-Vorpommern had 18,788 overnight stays per 1,000 inhabitants, Bavaria had 7,071 (Destatis Genesis, 2018). Figure 27: Gopili transport market share for domestic intercity journeys Ride sharing 19% Flight 4% The popularity of these states has also been found by the Stiftung für Zukunftsfragen. They found that the most popular states reported by German consumers for their main vacation trips in 2016 and 2017 were Bayern and Mecklenburg-Vorpommern. Both of these were selected by more German travelers in 2017 than in 2016, rising from 6.9% to 9% for Bavaria and 6.9% to 7.5% for Mecklenburg-Vorpommern. Outside of the top five states in Figure 42, all other German states were selected by just 6.4% of travelers in the survey (Stiftung für Zukunftsfragen, 2018). Bus 18% Train 59% Source: Gopili, 2016 stay at traditional hotels, they prefer quality in their accommodation, with TUI noting that 65% of their clients prefer to book a four-star hotel and lower categories are significantly less popular (TUI, 2018; fvw, 2018d). 2.3 Domestic Travel Transportation and Accommodation Most Germans prefer to take their own vehicle for domestic journeys. According to the FUR, 76% of Germans used their own vehicle to travel to their domestic vacation in 2016 (FUR, 2017). Outside of these the train is easily the most popular means of transport. Statistics provided to EyeforTravel by travel metasearch engine Gopili from German bookings on their site find that 59% of intercity travel is conducted using trains, 19% through ride-sharing and 18% via coach or bus (see Figure 27). FUR estimates that trains are twice as popular as coaches for domestic transport, although GfK has recorded that spending on coach journeys has grown by 13% per year from 2012 to 2016 (GfK, 2016b). When it comes to accommodation, Germans prefer to stay in hotels, with 51% of room nights spent in traditional hotels, and that figure rises to 58% when including inns, bed and breakfasts and pensions. Other popular options include vacation rentals and holiday homes (15%), campsites (7%), and youth hostels (5%) (Destatis, 2017d). It also seems that when Germans German Travel Consumer Report