The German economy and consumer is in
excellent shape in early 2018 and that means increased spending on travel in
the world’s third largest outbound market says EyeforTravel’s new German Travel
Consumer 2018 report, a free
excerpt from which is available now.
The German economy’s strength
stretches across multiple measures. GDP growth has been consistently upgraded
to a forecast of 2.3% in 2018, unemployment has retreated to a
post-Reunification low and measures of consumer and business confidence are
either just above or at record highs.
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.
To access the full
report and all of EyeforTravel’s research become a member of EyeforTravel
On Demand now:
- 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.