German consumers ready to spend on leisure travel in 2018
Soaring consumer confidence, a growing pay packet and a rising interest in travel will push German spending on leisure travel upwards in 2018 finds a new report from EyeforTravel.
Consumers are right to be confident as very low unemployment is creating an environment for strong wage growth, especially as consumers and unions are willing to ask for raises. Although real wage increases slowed down to 0.8% at end-2017 higher rates in 2015 and 2016, this should accelerate again, creating a strong environment for expanding spending on travel.
Already in late 2017 there were signs of stronger growth in consumer expenditure and the travel vertical economy that will carry through to 2018. Germany's trade surplus fell for the first time since 2009 even though export demand is very robust. This is a sign of quickly rising demand on the part of German consumers. This demand carries over to the German travel market, both domestically and internationally, with interest in travel among German consumers reaching a 10-year high as of late 2017. In 2017 the domestic market continued recent trends of solid expansion and the outbound market performed far better than in 2016.
Furthermore, German consumers were helped in 2017 by the performance of the euro. The Euro Currency Index, which measures a basket of major currencies against the euro, had its strongest value growth in 14 years, and this should hold over to 2018, helping support German spending power abroad.
This German spending power is already at the top of major European economies notes the report. In terms of Actual Individual Consumption (AIC) per capita, Germans spent EUR3,400 more than the European Area average of EUR21,100 in 2016 and in purchasing power standard, the average German household had around 19% extra disposable spending per year over the Euro Area average in 2016. Further growth in German pay packets in 2017 and 2018 will only strengthen German travel spending. The greatest areas of concentration of consumer spending power are to be found in the Ruhr, and major urban centers, such as Hamburg, Frankfurt, Stuttgart and Munich.
While the overall number of German consumers who participate in leisure travel is expected to remain broadly stable at just under 80% of consumers according to the report, there is scope for increased spending. The report notes that older German consumers will be the key demographic in the medium term. This is due to those aged over 55 increasing in size as an economic cohort alongside their greater leisure time and growing wealth. The report's consumer survey notes that those aged over 55 spent noticeably more than younger cohorts and were less concerned about budgetary considerations. Whereas a quarter of consumers under 35 reported spending less than EUR500 on their trip, just 14% of over 55s had such a low trip spend. This is no surprise as older Germans have done well in the current period of economic expansion. German state pensions experienced their biggest ever rise in 2016, estimated at 4% to 5%, and there were further increases of 3.6% in 2017.
This means that travel brands need to keep a close eye on the German travel market over 2018.
You can download an excerpt from the report by clicking here. This excerpt covers the state of the German economy, consumer and travel market in 2018. It includes economic performance data, consumer confidence outlooks, household wealth data, market sizing, spending analysis, and currency data.
- Detailed analysis of Germany's economy and its ramifications for consumer travel spending.
- More than 80 charts, figures and tables of data detailing the state of the German travel consumer.
- Outbound and domestic travel market overviews and outlooks.
- A breakdown of the German journey to booking, including lead times, key apps and most popular websites.
- Age and location breakdowns for key online behaviors, destination preferences and spending.
- Trends in German device ownership and usage.
- An overview of the state of Germany's travel industry.
- Forecasts and outlooks for technologies, destinations, and market growth.
- Data taken from more than 80 different sources.
EyeforTravel is an online travel intelligence provider to hotels, airlines, online travel agents, cruise, car hire firms and more. Established in 1997 by Tim Gunstone, right at the inception of online travel, the group offers a diverse product portfolio including industry analysis, insights, research, webinars, reports and conferences. From major hotel brands to new startups, EyeforTravel helps its 80,000 strong customer base make better decisions, build better brands, close the most lucrative deals and ultimately sell more of their product.
For more information visit www.eyefortravel.com.