Frankfurt, Dusseldorf German holidaymakers who rely on last-minute bargains this year are likely to be disappointed. The reason for this is a new business model for tour operators, which has become increasingly popular since Corona and encourages those who want to travel to visit the travel agency early: holiday bookings with the so-called flex option.
“Customers should no longer rely so much on last-minute offers,” said Tui Germany boss Stefan Baumert of the Handelsblatt, “the number of which is shrinking.”
For decades, Germany’s tour operators had stubbornly refused to allow holiday customers to cancel until shortly before the start of their trip – until the corona pandemic changed everything. In order to take away the tourist clientele’s fear of being left with the travel costs in the event of illness, Alltours, Tui and Co. conceded – initially for a limited period and usually for a small surcharge – the possibility of free cancellation or rebooking.
There seems to be no going back. “That came in the pandemic to stay,” said Baumert. The hotel market has been operating this business model as a standard for a long time. So it was only a matter of time before the flexible cancellation model would also find its way into the package travel market, says the Tui Germany boss. “The pandemic has only accelerated that.”
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Behind the insight – despite all postulated customer friendliness – is a business calculation. “The earlier the customers book, the sooner the vacation deposits flow into the tour operator’s coffers,” says Marija Linnhoff from the Association of Independent Self-employed Travel Agencies (VUSR).
Most travel companies can urgently use the money, because after almost three years of Corona, many tour operators are running out of cash reserves. The industry has by no means returned to its old strength.
According to figures from the travel agency service provider Tats, the agencies’ sales in 2022 as a whole were still 30 percent lower than before Corona. Seen over the year, the trend was upwards, but even in December 2022, almost 21 percent were still missing compared to the same month three years earlier.
Flexible tariffs often cost extra
Previous practice also speaks in favor of the fact that flexible options are becoming established in the industry. “Out of 100 flex bookings, only two were canceled on average,” reports Linnhoff from the travel agencies.
Accordingly, today hardly any tour operator does without the previously hated cancellation offers. DER Touristik (ITS, Jahn Reisen, Meiers Weltreisen) allows you to cancel your trip two weeks before departure for a surcharge of 59 euros. FTI charges an additional 45 euros for a cancellation option four weeks before departure, Tui charges an extra fee for the flex tariff. With Alltours, the option is already included in the total price.
The last-minute business, which has been particularly popular with bargain hunters in recent years, is threatened with an end. “No tour operator will be so stupid as to throw the holiday offers sold with Flexoption on the market again at a discount shortly before the main season,” Linnhoff expects. “Price-conscious customers would then cancel their bookings free of charge and then access the cheaper prices.”
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Baumert, the head of Tui Germany, also expects many vacationers to be disappointed in the hopes of a clearance sale at the end of the season. “All providers have now prepared for short-term bookings,” he says. “They don’t get nervous so early when occupancy is still a little low, and they don’t lower prices early like in the past.”
It is therefore worth booking early, he recommends. “Early bird discounts are often no longer topped by last-minute offers.” In addition, there may be capacity bottlenecks for the coming summer, which will reduce the supply of remaining items anyway. The travel agencies report a large rush – and this despite the sharp increase in the cost of living.
“I’m satisfied,” said Baumert von Tui, looking at the current booking situation. What he is currently seeing makes him feel positive. “I assume that in January we will have the highest bookings of the year for the first time since the pandemic began – just as it always was before the crisis.”
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Since March 2020, many tour operators and travel agencies have found themselves in a situation that threatens their very existence. Tui, FTI and the package travel provider Berge & Meer Touristik had to be saved from extinction with the help of the state. But things have been getting better since last summer.
“People spent more money on their vacation in winter,” reports Baumert. So far, this trend has also been observed for summer bookings. On average, people would not take shorter trips, nor would they book any lower categories.
“The will to save when planning vacations does not follow rising inflation, it is actually tending to decline slightly,” recently found the consulting firm PwC in a survey of 1,000 consumers aged 18 to 65. Ingo Bauer, Head of Transport, Logistics and Tourism at PwC Germany, was amazed at the survey results.
Citizens save for vacation elsewhere
The time-out is so important for many citizens, he explained in a statement that they limit their spending elsewhere – for example when buying jewelry, watches or furniture. Even at events and concerts, many wanted to save more than on vacation. If the industry does not experience a setback in the short term – for example due to the Ukraine war – hotels and holiday planes can already be expected to be fully booked for the 2023 peak season.
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The industry association BDL expects that in the first half of the year only 78 percent as many seats will be available on planes as before the corona pandemic. CDU tourism spokeswoman Anja Karliczek is already warning: “In view of the expected high volume of travel during this year’s holiday season, it must be ensured that the airports in Germany do not sink into chaos again at times like last year.”
Germany’s vacationers are reacting to the risks of the Ukraine war and inflation with a well-known booking strategy: In order not to be surprised by additional costs on site, many rely on all-inclusive offers. “Currently, more than half of the bookings are all-inclusive offers,” reports Tui manager Baumert. Such complete packages are in great demand, especially in countries such as Turkey or Egypt, but bookings in Tunisia are also developing better and better. “People want budget security, with all-inclusive all additional costs are actually included on site.”
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