A turbulent year lies behind the travel industry – and also ahead of it in 2020, believes tourism expert and management consultant Markus Heller. In the tour operator market, the cards are being reshuffled, digitalisation and discounts are causing unrest in distribution, and the future of Condor is uncertain in holiday air travel. In the following article Markus Heller describes the most important changes in the travel industry in 2020.
Following the insolvency of Thomas Cook and the sale of a number of tour operator brands by the TUI Group, the cards are being reshuffled in package tourism. With the takeover of the Cook subsidiaries Öger, Bucher and Neckermann by the Anex Group, the acquisition of Berge & Meer and Boomerang by the Genui holding company, the takeover of Wolters by E-Domizil, the pending sale of Ameropa and the securing of the Thomas Cook brand by the Chinese Fosun Group, more well-known tour operators and brands are changing hands than probably ever before.
As a consequence, there will be some changes in sales: Product ranges will be critically reviewed by the new owners of the tour operators and commission models will be adjusted. This should lead to more or less strong revenue effects on the travel agency side. Due to the increasing pressure towards digitalization, a sustainable adjustment of the sales and revenue models can be expected in all mergers.
But the sales organisations are also facing structural changes. Especially due to new ownership structures in stationary sales, many travel agency owners are currently finding a new home and, if necessary, realigning themselves. The nominal market power of the RTK cooperation will continue to increase – the head office in Burghausen must now prove that it can also realize the announced professionalization of sales management.
Sales organizations such as DER Touristik, TUI or LCC are also starting to implement their digitalization offensive. Platform approaches will be used to try to align business processes with the requirements of the younger and middle generation living in the digital age on the one hand and to approach the professionalism of many online players in the processing of customer data on the other.
The growth-driven business models of Check24 & Co. will continue to put pressure on sales margins and drive the sales market ahead of itself through discounts and cross-subsidisation. It remains to be seen whether the establishment of entire booking environments with a deep integration of different product and booking portals as well as the approach of real “connected trips” by Booking.com will already achieve a breakthrough in 2020. However, should this happen, the largest game change with comprehensive effects on the Central European tour operator and distribution models will become reality!
The tourist flight market will also reorganise itself in 2020 after a series of insolvencies such as Airberlin two years ago, Germania and the “near insolvency” of Condor last year. Will Eurowings and Condor manage to stabilise their flight operations? Despite numerous failed attempts by small airline brands in recent years, new players will once again enter the market and try to exploit market gaps.
Consequences for the travel industry in 2020 will also be shown by the intensification of the sales activities of the core brand in premium tourism announced by Lufthansa shortly before Christmas. The crane could (again) become an increasingly important service component for building-block tourism, high-margin exclusive package deals as well as the distribution’s own events.
In the destinations, DER Touristik in particular did well by steadily expanding its own Destination Management Company (DMC), strengthening its own hotel brand Cooee and acquiring selected hotel brands such as Sentido Boden. In the future, efforts will be made to adapt the business models of TUI and FTI and to increasingly generate earnings power from DMC. Against this background, the pressure on pure tour operators will continue to increase, as the money is primarily earned in the destination and the bundling of travel services is generating ever smaller margins.
Another aspect relevant to destinations is the bookability of an increasing number of destination services both directly by the end customer and by sales organisations in the source market. In times of overtourism in mass destinations and the instability of holiday experiences and destinations, the unique holiday experience is becoming more and more important. Against this backdrop, travel sales businesses must focus even more strongly on detailed questions regarding local experiences and the early booking of limited service offerings in the destination.
This article has also been published as a guest blog in the trade journal Reise vor9.