Tourism: The death of the big travel agencies has begun

Es happened in Schramberg, in the constituency of Volker Kauder (CDU), the long-term Union parliamentary leader in the Bundestag. The Federal Government’s Tourism Commissioner, Thomas Bareiß (CDU), also comes from the area. But the politicians could only watch helplessly at the end of the downfall of the Bühler travel agency chain in Baden-Württemberg.

The federal government had done a lot to prevent the complete collapse of the tourism business in the corona pandemic. In addition to loans worth billions for corporations such as Lufthansa, TUI or FTI, the federal government also supported small travel agencies with bridging aid. The collapse of the tourist sales structures could be avoided. But then, last week, the Bühler bankruptcy showed what large gaps still exist in the federal government’s tourist rescue plan.

While it is usually the little ones who fall through the cracks, it is exactly the other way around with travel agencies: the little ones are helped, the big ones fall behind. Such weak points in the pandemic policy will be a central topic at the digital annual congress of the German Travel Association (DRV) from this Tuesday.

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Because the nerves are on edge: January is traditionally the most important booking month for package tours in the summer season. But the partial lockdown has just been extended by the federal government until January 10th. In the face of such uncertainties, who would want to book a trip?

The cancellation experiences of the chaos year 2020, when thousands of consumers had to worry about the reimbursement of their prepayments for a long time, suggest that 2021 will be more of a last-minute deal. The federal aid was originally intended to provide relief to around 10,000 German travel agencies, but they have now become existential.

Although there has been no large wave of bankruptcies so far, Federal Minister of Economics Peter Altmaier (CDU) should have to listen to some criticism at the DRV Congress. “The bridging aid provided by the federal government,” says Bühler managing director Peter Finke with resignation, “is very good for companies with ten or 20 jobs – for companies of our size they are a drop in the ocean.”

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The middle position between large corporations and small businesses was the undoing of Bühler. The federal government had capped Bridging Aids I and II to 50,000 euros per month and company. Quite adequate for a small business.

But Bühler operates 37 branches and employs 230 people. That means 37 times rent and 230 salaries per month, but the 50,000 euros do not apply to each branch, but to the group as a whole. “Every month,” says Managing Director Finke, “we have more than half a million euros in operating costs.”

The aid of 50,000 euros per month evaporated at Bühler without leaving much of a trace. The travel agency chain under the leadership of the Finke family had held out for 50 years, and had even grown into one of the big ones in stationary travel sales – then five months of Corona were enough for the financial end. Nevertheless, operations at Bühler continue in insolvency mode.

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Generous utility programs

“The example of the travel agency Bühler shows that medium-sized businesses are coming under increasing pressure,” warns Markus Orth, head of Lufthansa City Center (LCC). His company operates 570 travel agencies worldwide, 300 of them in Germany. “While the bridging aid from the federal government is quite suitable to help small and medium-sized travel agencies to survive the period of no turnover, the big ones don’t get by with it.”

Orth had founded the “Ü50” initiative together with the booking service provider TAA: It campaigned to abolish the cap on state aid to 50,000 euros. With success: in future, up to 200,000 euros in aid will be paid out every month.

But “that’s a long way from eating the cheese,” says Orth. “The design rules are still very diffuse and do not allow serious and reliable planning for 2021.” As long as politics does not provide clear information here, the new bridging allowance III is “nothing more than a sham package”.

Even 200,000 euros a month is not enough

After all, aid of 200,000 euros per month is not enough if the real costs of some affiliated companies for rent and salaries are more than 500,000 euros. “It is incomprehensible that medium-sized affiliated companies such as the Bühler travel agency were not taken into account in the bridging aid III and will tear other healthy companies into the abyss,” criticized Orth. “In the Bühler case, the state aid did not even extend to Bridging Aid II.” It is by no means an isolated case: the Fahrenkrog chain with six branches and 70 employees had already filed for bankruptcy shortly before.

Too little, too late and too complicated: That is the criticism of the travel agency chains of the state aid programs. “The regulation for November and December aid for restaurateurs fits on a beer mat”, Orth draws the comparison: “The travel agencies go swimming in the jungle of application guidelines.”

One of the particular burdens on stationary travel sales was that they could not rely on short-time working as extensively as other industries. The major tour operators largely offloaded the burden of customer communication during the lockdowns to local travel agents.

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They were then allowed to process a flood of cancellations, complaints and rebooking without any new business. In addition to the economic and medical uncertainties of the past few months, overwork, stress and anger among the sales force on the customer front have been added.

So it is no wonder that the industry now wants to see the federal government nail it down. After the ski season has largely been canceled, the greatest possible security is now expected from the new bridging allowance III. “Specifically, it is about which assessment basis is used for financial aid from January to June,” says Adrian Brehm, managing director of the back office service provider TAA. “It would be correct and sensible to use the comparison months from 2019 as a reference, because this was the last normal financial year.”

But it is still unclear what exactly the policy is up to. “Orientation towards 2020 would be fatal,” says Brehm. “Finally, the business completely collapsed from March onwards.”

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If 2019 is the assessment basis as required, the federal budget will again face high burdens. According to the figures of the “travel agency mirror” of the service provider ta.ts, total sales in November were 92.2 percent below the previous year. The turnover in the air traffic recorded this month a minus of 93.8 percent. Viewed cumulatively, the total invoiced travel agency turnover in the months from January to November is minus 77 percent.

The industry is now hoping that the changes in the travel behavior of Germans hoped for by climate protectors in particular will not materialize and that there will instead be a strong catch-up effect once vaccination has started. According to a survey by the tourism fair ITB Berlin and the IPK International these hopes could be justified.

According to this, Germans had already traveled abroad more than average in the summer months. The experience gained was much better than expected. “Both travel destinations and tourist offers have been able to improve their safety image in the last four months,” the trade fair concluded.

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Around a third of the Germans surveyed went abroad in the summer months from June to August despite Corona. This puts the Germans well above the European average of 22 percent and the global average of 19 percent. Around 60 percent traveled to a neighboring country, which means that the car was by far the most popular means of transport with 63 percent – followed by the airplane with 25 percent and the train with twelve percent.

When asked about their experience of what it is like to travel abroad in times of Corona, 66 percent of Germans said that it was “better than expected”.

The intention of Germans to travel abroad in the next twelve months has risen again by six percent compared to the last survey in June and is again well above the European and global average, reports the ITB further: “Especially those who are at the beginning June still stated that trips abroad are out of the question, are gradually returning to the group of those willing to travel. “

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