Matthias Rotter, managing director, DER Touristik Frankfurt 

GERMAN tour operators interviewed said Asia would do well this year, citing its safe image overall as one of the reasons for this assessment.

Safety has become the major influencer in German consumers’ travel decision-making process after the recent terror attacks, ongoing conflicts and the refugee crisis that are affecting travel to destinations such as Egypt, Turkey, Tunisia and Greece, according to tour operators.

“These are difficult days and it’s a huge problem to sell the African part of the Mediterranean, said DER Touristik Frankfurt managing director, Matthias Rotter.

“Fortunately DERTOUR and Meier’s have a big portfolio of destinations and we’re able to compensate for a loss in one with a gain in another,” he said.

Rotter expects longhaul business to remain steady with a slight increase to Asia and a larger one to South Africa due to pent-up demand after the Ebola crisis a few years ago. In Asia, Sri Lanka is doing “extremely well” for DER, as is Japan – again due to pent-up demand following the Fukushima tragedy. Thailand and the Philippines are at the same level as last year.

“Sri Lanka contracts in euro, whereas the Thai baht’s link to the US dollar has caused a 15 per cent increase in rates due to the strengthening of the US dollar against the euro,” Rotter pointed out. But he said suppliers in Thailand had been cooperative in not raising rates.

Marco Polo Reisen’s managing director Holger Baldus also said there were no major price increases in traditional destinations in Asia like Thailand, but what was more attractive to Germans was not pricing but that Asia was seen as safe. “The red and yellow shirts, Erawan bombing, etc, are all but forgotten now. People are travelling to where they feel it is safe. Price comes second,” he said.

For Marco Polo Reisen, Indochina, India and China are “back on track” after a decline of 12 per cent, nine per cent and 26 per cent respectively last year. But the real star is Japan, which rose a whopping 73 per cent last year.

“We expect a bit more growth this year, after last year’s substantial one. That’s more than 1,000 guests to Japan. For its high prices that’s a lot of guests. Again, it’s not about pricing. Japan is seen as safe,” said Baldus.

He added: “Asia is looking good…In the end, Germans will continue to travel. Our economy is doing well. It’s a question of where and business is being re-divided according to safety perceptions.”

Thomas Cook Touristik product manager Asia, Arabia and Indian Ocean, Jens-Jochen Lauff, agreed: “The clients are never more concerned about safety and security than now. The reservations people are getting the question, ‘Is it safe to go?’ all the time. Clients are now very aware of (hazards) be it a virus or terror. This is especially so for families than couples. So the travel agent has quite a lot of influence in helping clients decide where to go. If they say Bali is safe, it can influence the clients to go,” said Lauff.

Bali, Thailand and Vietnam are all doing well for Thomas Cook. The Maldives however is down, with Lauff saying there is a shift from the Maldives, which contracts in US dollar, to Mauritius, which contracts in euro. On top of that, he said, Maldives’ high-end hotels were over-pricing themselves.

Read more stories from our ITB Berlin TTG Asia Show Daily here.

Itävaara and van der Marck: a focus on personalised experiences

TRAVEL industry veterans and destination specialists Andre van der Marck and Mika Itävaara have come together to establish new offices in Thailand and Myanmar under HG Travel, a Hanoi-based DMC with existing offices in Vietnam, Cambodia and Laos.

“The joint venture came at the right time,” said HG Travel Thailand managing director Andre van der Marck, formerly vice president of Khiri Travel.

HG Travel Thailand is expected to start operations in April 2016, and will initially boast a team of five in Bangkok and Chiang Mai.

HG Travel Myanmar managing director Mika Itävaara, meanwhile, leads the Indochina-focused DMC’s expansion into Myanmar with the merger of Discovery DMC, a boutique tour company where he was owner and CEO. The Yangon-based office began operations late last year with 13 staff.

The business model of HG Travel is strictly B2B, and van der Marck and Itävaara will focus on building the US and European outbound markets into Thailand and Myanmar.

Said van der Marck: “We will fill the gap for personalised, middle size and high touch segment (in both countries), led by a general manager who has been (in the destination) for ages. We will offer customised tours with destination experts.”

As Thailand and Indochina remain popular destinations, the region’s highly competitive DMC industry still has room for more players, commented van der Marck.

“With over 25 million arrivals to Thailand, I just need 0.01 per cent of the market. There’s something for everyone,” he added.

Itävaara sees untapped potential in northern Europe and will tap his Finnish background and industry links to grow the longhaul market for HG Travel Myanmar.

“The Scandinavian market is only coming in a small trickle into Myanmar. With Emirates’ new daily service (linking Dubai and Yangon from August 3), Yangon will be a nice hub and travellers can fly out of Bangkok or Phuket.”

Read more stories from our ITB Berlin TTG Asia Show Daily here.

Rene Herzog, during an interview with TTG Asia

HAVING bought the entire Kuoni European tour operating business, DER Touristik Group is streamlining processes in a way that won’t affect the customer-facing side but will have trade implications on issues such as contracting and ground-handling.

Already, Asian Trails has lost the Kuoni Switzerland, Scandinavia and the UK accounts to Go Vacation Thailand and Indonesia, the DMC owned by DER. Asian Trails continues to handle Kuoni clients from the three source markets in areas where Go Vacation is not represented, such as Malaysia, Cambodia, Myanmar and Laos.

But with more volume – the acquisition makes DER a leading pan-European travel company with some 7.7 million customers from source markets like Germany, Switzerland, Austria, Great Britain, Scandinavia, Czech Republic, Poland, Slovakia and Hungary – DER is looking to expand its DMC footprint in countries it operates in that are using third-party DMCs, said DER Touristik CEO Central Europe Rene Herzog in an interview with TTG Asia.

This could be via Go Vacation, joint ventures with other companies or founding new companies. It announced yesterday a joint venture with Buffalo Tours to create Go Vacation Vietnam. The new partnership will welcome its first guests from November 1.

“The DMC is an important part of the value chain. Whenever we have the size, it makes sense to be in control of the quality and value creation,” said Herzog.

DER at the same time is streamlining its Frankfurt office which handles brands DERTOUR, Meier’s Weltreisen and ADAC, and Cologne office (ITS and Jahn Reisen). All these brands, including Kuoni, will eventually be on one IT infrastructure. Corporate-wise, Herzog’s namecard already carries all the brands, including Kuoni, and “it is possible over time the name (DER) will change but the brands will remain; customer-facing activities remain exactly as they are”, he said.

“It’s the behind-the-scenes aspects like data-entering, IT, brochure production, etc, that we are harmonising, areas that customers don’t see. We have bought the rights to the Kuoni brand for 50 years. In the UK and Switzerland the brand is strong, why should we change it?,” said Herzog.

Asked about the impact of Kuoni Group’s sale to EQT, Herzog admitted it was “frustrating”.

“There’s so much negative press coverage surrounding the Kuoni Group in Switzerland and customers do not always understand that Kuoni Reisen is not part of Kuoni Group anymore.

Right now, because of the negative news, a customer passes a Kuoni agency in Switzerland and thinks it’s going bankrupt because of all the negative press. It’s not. It’s a different Kuoni but how do we tell him that? We’re not going to be putting stickers on the Kuoni brand saying this now belongs to DER,” said Herzog.

He expects the issue to be resolved once Kuoni is privatised.

Asked why Kuoni was a good buy, he said: “It has great brands, great market position, an existing customer base, very professional people and it is not overpriced.”

Meanwhile, Asian Trails’ CEO Laurent Kuenzle said the company was prepared that the Kuoni accounts would go to Go Vacation, saying this was “the logical conclusion” since DER owns the DMC.

On impact to the business, he said Asian Trails was not dependent on any one source, handling more than 350,000 passengers a year from around the world.

“This also opens a new opportunity for us to work with other partners which couldn’t work with us due to our association with Kuoni, which they deemed a competitor,” he added.

But he admitted on the emotional level, it was sad to lose the accounts. “Some of them were our launch customers,” he said.

Read more stories from our ITB Berlin TTG Asia Show Daily here.

IN the face of rising competition and tighter margins, SriLankan Airlines has embarked on a restructuring strategy that will see the carrier retaining its services to Europe while giving greater emphasis to Asia and growing Colombo as a regional hub.

“Our new board of directors inherited a bad situation,” said Ajith Dias, chairman of SriLankan Airlines, who was appointed in early 2015. “Our restructuring process will cut non-profitable routes, concentrate on the Far East and India, and maintain our position in Europe.”

Although SriLankan Airlines has been seeing “good” load factors on its European routes, services to low-yield Rome will be phased out from May 1 in order for the carrier to increase capacity on more commercially viable routes.

The airline will add a fifth weekly frequency to Frankfurt from July and retain its twice-daily London and four-times weekly Paris services. It will retain its slots in Rome for a re-assessment likely in two years’ time.

While the historic low global fuel prices have helped to stem losses, the current shaky economic and political outlook in Europe is posing “uncertain times” for the largely unprofitable airline. “The off season starting from May will be critical for us, but so far it’s still looking good,” said Dias.

“We are still losing money now but we have made big progress in cutting losses last year. I expect we will take another two years to overcome (the losses).”

“Serious competition” from the Middle Eastern airlines has weighed heavily on the carrier’s performance on routes out of Europe, admitted Dias, but the company is nevertheless keen to expand its codesharing partnerships with the Gulf carriers as it seeks to build Colombo as a regional air hub, particularly for traffic from the Middle East to South India and the Maldives.

The carrier is also undergoing a fleet development programme to replace its ageing A340 fleet with eight A350s on order. These will likely be deployed on operations to Europe and China when it takes delivery of them in 2016 and 2017.

With an estimated 40 per cent share of the country’s total seat capacity, Dias is confident that the “all-time high buoyancy for Sri Lanka” in terms of business and investment will work favourably for the country’s tourism sector.

The Sri Lanka Tourism Development Authority has set a target of four million arrivals by 2020, up from 1.8 million in 2015.

Read more stories from our ITB Berlin TTG Asia Show Daily here.

TOURISM Malaysia will be increasing destination promotion efforts in Germany following the loss of direct air connectivity between Malaysia and Germany on March 1.

Lufthansa’s suspension of its Frankfurt-Kuala Lumpur service, which had been in operation since 2004, translated to a loss of over 100,000 direct seats per year to Malaysia, said Mohamed Amin Yahya, director of Tourism Malaysia Frankfurt.

To ensure that Malaysia is not forgotten, he said the NTO would be developing “tactical campaigns and collaborations” with other airlines that provide connectivity from the German market to Malaysia.

For example, Tourism Malaysia and Singapore Airlines will be signing a marketing collaboration agreement during ITB Berlin to bring in more German tourists to destinations such as Penang, Langkawi, Sabah and Sarawak, he said.

Mohamed Amin said the destination’s brand awareness would also be raised through advertising. “We will place advertisements in the relevant German newspapers, and in the tourism trade and consumer magazines,” he said.

A new taxi and tram advertising campaign, which involves 100 taxis, is running the entire month of March and features Malaysia’s most popular tourism products, such as the Gawai festival. This is complemented by big banner advertisements at the Berlin Hauptbahnhof train station, which runs to end-April.

Apart from fam trips, Mohamed Amin said the NTO was also conducting an e-learning programme for travel agents to keep them up-to-date on the latest offerings in Malaysia.

Elizabeth Wong, executive councillor of Selangor State Government and chairperson of the standing committee for tourism, consumer affairs and environment, said there were still connecting flights that would bring Europeans to Malaysia and the destination was becoming more affordable for them especially with the weakened Malaysia currency. Thirty per cent of Selangor’s tourism traffic is from Europe.

Malaysia’s inbound travel agents also remain sanguine despite the loss of direct air connectivity. Manfred Kurz, managing director, Diethelm Malaysia, said: “We did a check and found that only 18 per cent of our guests travelled on Lufthansa. The rest came through a Middle Eastern airline. Thus, we don’t expect this (suspension) to have a big impact (on business).

“Our partners have indicated that they will continue to sell Malaysia.”

Alex Lee, CEO of Ping Anchorage Travel & Tours, foresees a slight drop in the high-end segment from Germany, but expects volume to be maintained among middle-class travellers and backpackers who are likely to fly with a Middle Eastern airline to Malaysia.

Read more stories from our ITB Berlin TTG Asia Show Daily here.