This year, Travel Compass 2023 from PayPal and Dr. Fried & Partner is once again providing exciting insights into the German holiday travel market. The study, which is being published for the second year in a row, examines changes in demand, booking and payment behaviour. The contents of the Travel Compass 2023 are based on the results of the evaluation of Travel Intelligence booking data from online and offline sales channels (data source: Travel Data + Analytics) as well as qualitative expert interviews. This year’s focus ‘Travel after Corona: Safe – Sustainable – Individual’ points out the most important contents of the study.
Recovery of the German holiday travel market
The German holiday travel market is gradually returning to its pre-coronavirus level. This is reflected not only in the sales volume, but also in the booking and demand behaviour of travellers. While the sales volume in previous years was still well below the figures for the 2018/19 tourism year, the 2021/22 tourism year is still 13% below the previous year.
Positive developments are also emerging in terms of bookings. January 2023 saw strong booking volumes. According to industry experts, this was due to favourable early booking conditions, pent-up demand and expectations of possible travel price increases in the current year.
And the booking behaviour of German holidaymakers is also gradually returning to normal. In addition to the existing short-term booking behaviour, early bookers are returning. Strong last-minute demand is to be expected this year. Rebookings and cancellations are returning to previous patterns, so that the share of flexi-rates is continuously decreasing. According to the experts, the majority of these did not lead to higher cancellation rates. However, flexible rates remain important for some holidaymakers, especially early bookers.
Long-haul and round trips are coming back and are increasingly in demand again after the lifting of entry restrictions. This strengthens stationary sales, which can catch up on existing backlogs as a result of the return of the travel business, which requires a great deal of advice.
Current challenges facing the industry
The tourism industry is facing numerous challenges. It is not only confronted with the effects of inflation, the coronavirus pandemic, the war in Ukraine and inflation, but also with rising holiday prices, scarcer capacities, staff shortages and the challenges of digitalisation. The topic of sustainability is particularly important to industry experts. Effectively addressing this issue requires a common definition and a cohesive approach within the industry, as well as transparent communication with customers.
However, the current crises are also giving rise to positive developments for the industry. Package holidays are once again in high demand and valued by customers as a result of the pandemic. The high popularity of package holidays is due in particular to the factors of security, reliability, convenience and a high degree of customisation.
Increasing importance of digital solutions and modern means of payment
Digital solutions and modern payment methods play a significant role in the customer journey. The focus is on providing a customer experience that is as individual as possible, with good service, a high level of convenience and modern communication channels. This includes, for example, self-service features for planning and adjusting trips, as well as the option of using modern communication platforms such as video advice or WhatsApp. To this end, closer integration of the travel industry and the formation of strategic partnerships are relevant.
Modern payment providers are also becoming increasingly important for the travel industry, especially for the under-35s. PayPal is already represented on many travel portals and its use is increasing, according to industry experts.
Conclusion
The Travel Compass 2023 from PayPal and Dr. Fried & Partner highlights the changes in demand, booking and payment behaviour in the German holiday travel market. It shows that, in addition to the effects of the pandemic, further challenges are shaping the tourism industry. Opportunities arise from digital solutions and modern payment methods such as PayPal, which can contribute to an improved customer experience throughout the entire customer journey.