TOURISM DEMAND Current and Future Markets Mr Sören Hartmann Board Member TUI Deutschland GmbH Porto, 20th April 2005 TUI | Der TUI Konzern | | Folie 1 Agenda Change in product offering Change in demand What will happen next? T.U.I. What has happened in Portugal? Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 2 Change in product offering e2 New destinations and low-cost carriers result in excess capacity Allocations in the overall tourist market have increased above average New Outstanding value for money in new hotels destination such as in Turkey, Egypt, Bulgaria s Low-cost carriers and local airlines have extended Low-cost their portfolio of routes, eg Ryanair, Easyjet etc. carriers They have also modified customers’ booking behaviour through price incentives (19 euros, for example) and aggressive marketing campaigns Both developments result in excess capacity: stiff competition and falling prices . Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 4 Previous approach to the product mainly via the operator and travel agencies Old New Demand Demand Sales Sales Operators Operators Carrier Dest. services Carrier Dest. Hotels services Hotels In the past: In future: Growth drivers Growth drivers along the entire tourist Sales and operator value chain are possible. Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 5 The offering is characterised by excess capacity Strong changes in the offering have an effect on the market New destinations with an excellent hotel portfolio Low-cost carriers with additional offer Enormous variety of offers Constant price decline Many additional market players Enormous duplication of the product over the Internet Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 6 Change in demand e2 Customers have a clear idea of their holiday Customers attach great importance to service and individual offers Changed customer booking behaviour More travel experience More flexible They exhaust all available distribution channels before deciding on a holiday More price-sensitive Destination has become an exchangeable currency “Self-oriented” and want to be addressed individually. Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 8 What will happen next? Internet as the most important information tool The consumer discovers and uses all distribution channels available to him Brochures of tour operators Travel agencies Travel TV Last minute offers (flyers, mailings) Internet Internet as the most important information medium and an excellent communication and organisation tool Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 10 Standard products no longer in line with market requirements The domain of mediocrity in respect of price, quality and service leads to a dead end Addressing the product to specific target-groups (budget + premium are growing steadily) Target-group-oriented approach to the customer Rethinking traditional price strategies (increased price sensitivity of customers) Defining new strategic options (budget and premium markets will in future have to be more finely structured) Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 11 Two approaches for marketing The marketing of products will in future be the decisive element Marketing via a multitude of providers Cooperation with a strong partner Several sales channels Strong brand in all distribution channels Controlling the allocations and price is very difficult Product in association with a strong brand is consciously perceived by the consumer Price clarity via all distribution channels is guaranteed Cost of marketing much lower Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 12 The customer would like to get all services from one source Market changes have an effect on customer booking behaviour Changed customer booking behaviour Good value for money Simple payment handling (handling of all services by one provider) Recommendation and advice for certain products (quality products) Time saving in booking and Dependability and presence of the tour operator in the destination (chance of amendment, guarantee of the booked service) Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 13 A strong partner should cover all sales channels In a cooperation with a strong partner, this should: have a strong brand familiarity, be represented with his strong brands in all sales channels (brochure, travel magazine, TV, Internet, etc.), have the necessary systems and resources, have the appropriate know-how, be able to control allocations and guarantee standardised pricing of products Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 14 T.U.I. Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 15 The strong brand TUI as orientation tool and possibility of entering all distribution channels Customer Brochures Travel Hotel TV channel agencies Portal/Internet with a brand familiarity of over 90 percent, TUI has the best chances of firing the customer with enthusiasm for itself and for the service provider (hotel) Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 16 The TUI brand is present in all distribution channels TUI offers the customer: good value for money, all products from one source, a simple handling system (payment handling), professionalism and expertise, trust and service and quality along the entire value creation chain A well-known visual aid to orientation Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 17 What has happened in Portugal? e2 Booking situation Summer 2005 Portugal records a strong increase with TUI Percentage development of S 05 compared to S 04 as of 01.04.2005 Turnover Quantity Balearics 8,7% 29,1% Canary Islands 0,0% 4,4% Spain Mainland -1,8% 16,1% Portugal 22,9% 19,9% Greece 6,9% 4,3% Turkey 10,5% 11,1% Egypt -2,0% -12,1% Tunisia 17,5% 22,7% Dom. Rep. -10,3% -6,9% Country destinations * -11,1% -9,5% Others** 9,4% -5,9% * Germany, Austria, Switzerland, France, BeNeLux, Scandinavia, UK, Ireland, Iceland, Croatia/Slov./Montenegro, Eastern Europe res excl. Bulg./Rumania **Cyprus, Malta, Morocco, Orient, Bulgaria, Rumania, other long-haul destinations Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 19 Does Portugal approach the right target groups? (1) Booking behaviour 1999/2000 to 2003/2004 (Source: Tourist/Travel Scope) Type of holiday Decline of seaside holidays from 55 % to 42 % Increase in study trips from 4% to 7% Booking periods Decline in bookings made more than 4 months in advance from 28% to 15% Increase in bookings made 1-4 months in advance from 39% to 53% Internet Increase in its use to obtain information from 13% to 25% Increase in bookings made via Internet from 4% to 22% Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 20 Does Portugal approach the right target groups? (2) Booking behaviour 1999/2000 to 2003/2004 (Source: Tourist/Travel Scope) Family bookings Decline of the family bookings from 18% to 13% Decline of bookings with 2 children from 31% to 29% Decline of bookings with more than 2 children from 7% to 0% Age groups Decline of 20 – 34 year-olds from 23% to 18% Decline of 35 – 49 year-olds from 25% to 20% Increase in the 50 – 64 year-olds from 28% to 34% Increase in the group over 64 years from 14% to 18% Catering Constant all-inclusive offer of 2% Increase in the all-inclusive offer in the overall market of 26% per annum Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 21 Emphasize clearly the added value and advantages Modified booking behaviour demands target group oriented approach Through optimal communication and marketing activities, Communicatio Portugal should emphasise the added value and advantages n + Marketing of the country A low price is no longer the main argument for the holiday decision compared with other destinations Offer target-group specific products Target group Emphasize the added value and advantanges of the approach hotel Offer the right customer through the right channel with a suitable product to a reasonable price Hotelier should decide on the right partner Strong partner Standardised use of all distribution channels if possible Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 22 Let‘s manage the new challenges together Let„s take on the tasks – as strong partners – and progress together! Portugal TUI Hotels Deutschland Strong partners Mr. Hartmann, Board Member TUI Deutschland, Porto 20st April 2005 Page 23 Thank you very much!