Political unrest on the eastern Mediterranean hasn’t dented German tour operators’ profits. But Brexit has, writes Handelsblatt’s companies and markets editor Christoph Schlautmann.
Anyone booking a vacation to Spain, Greece or Croatia this summer was in for a shock. Much beach accommodation had sold out, and what was left seemed to cost 50 percent more than last year. The law of supply and demand became starkly apparent. In fact, there was a plentiful supply of places to stay – just not areas where tourists felt safe.
In the first half of 2017, close to 700,000 Germans who had traveled to Turkey in 2015 looked for an alternative destination for their summer break. Egypt, another tourism hot spot, was also shunned, with the number of tourists down by about 300,000 a month compared to two years ago. Crowds of tourists turned to the western Mediterranean and Canary Islands instead.
Media reports of isolated terrorist attacks led travelers to believe they would be risking life and limb by returning to destinations they had vacationed at for years. Meanwhile, the German government issued a risk warning for travelers to Turkey.
Tour operators’ quarterly reports show they’ve made plenty of money by diverting flows of vacationers to destinations that aren’t suffering from such bad press.
But vacationers returning from these supposedly dangerous holiday destinations say fears are unfounded. A Frankfurt fund manager who spent a relaxing summer vacation in supposedly terror-afflicted Tunisia, complained of “fake news.” In any case, tour operators’ quarterly reports show they’ve made plenty of money by diverting flows of vacationers to destinations that aren’t suffering from such bad press.
For travel companies, the political upheaval that poses a real threat isn’t on the eastern Mediterranean but Great Britain. German companies like TUI, with its powerful UK tour operators Thomson and First Choice, are seeing profits rapidly eroded by the Brexit-weakened pound. Converted to euros, profits are worth about a quarter less than last year. Which is why chief executive Officer Fritz Joussen raised his revenue expectations on Thursday but maintained his earnings outlook.
Handelsblatt Global
