Before the pandemic, Germany was the largest business travel market in Europe. According to the German travel association DRV, German business travellers made 189.6 million trips with the market as a whole worth €53.5 billion in 2018. Of that impressive sum, dedicated travel management companies accounted for €7.8 billion in sales.
The pandemic, as everywhere else, has changed all that with business travel decimated. Munich Airport passenger traffic declined by 76.8 per cent in 2020 while Frankfurt Airport saw 73.4 per cent fewer travellers in the year. The effect of the pandemic on business travel was even worse, with some travel management companies reporting a decline in business of 90 per cent or more.
It was inevitable that the German government would have to pump hundreds of billions into the economy, and travel was one of the most affected sectors due to the closure of international borders and the shutdown of the industry.
96 per cent of German travel agencies say they have had to use the federal government's aid
Even Lufthansa Group needed help. In June 2020, the government agreed to a €6 billion package to support the airline colossus. The government also unveiled hundreds of billions in euros for large companies suffering as well as billions in support for small to medium sized companies and self-employed individuals.
Germany’s DRV revealed in March that 96 per cent of travel agencies say they have had to use the federal government's aid. And some 90 per cent feel that the current aid needs to be continued. DRV president Norbert Fiebig said: “This underlines once again how dramatic the economic situation is in the travel industry. An end to the corona pandemic is currently not in sight. It will take some time before the travel business has returned to an almost normal level. The travel industry therefore needs further support and also quick clarity about the framework conditions for bridging aid and short-time working allowances – many livelihoods and many jobs are at stake.”
Despite the aid during 2020, some travel agencies were unable to make it through the year. STA Travel, which had 42 branches in Germany, filed for insolvency in September 2020. And in November 2020, the Bühler travel agency group in Schrammberg filed for bankruptcy.
Managing directors Peter and Markus Finke said that even though the German government’s bridging aid had helped towards fixed costs such as rent and IT, the company "could not continue to run economically for nine months without significant sales". Bühler’s business travel division, which had six offices, was bought out of administration by Comtravo in January.
Consolidation was already happening in the market before the pandemic. American Express GBT’s acquisition of DER Business Travel, first announced in Business Travel News in June 2019, was completed in September of that year but the business continues under the existing branding for the time being, hence its appearance in our ranking.
The majority of experts at VDR member companies predict permanent declines in business travel of between 10 and 30 per cent
So what of the future? German newspaper Welt am Sonntag estimated in March 2021 that German companies spent €50 billion less on business travel in 2020 due to the coronavirus pandemic.
In the German Business Travel Association’s (VDR’s) business travel report 2020, the association said that the vast majority of business travel experts at VDR member companies predict permanent declines of business travel of between 10 and 30 per cent.
There is a light at the end of the tunnel, however. GDP – a key driver of business travel – declined by 4.9 per cent in 2020 according to the International Monetary Fund but is forecast to grow by 3.6 per cent in 2021.
Continued government support will be invaluable in ensuring there will be companies around to service this restart. Further consolidation seems inevitable.
Discover the background to Europe’s multinational TMCs whose presence span the continent, read analysis of the UK, French and German TMC markets, and explore the mergers and acquisitions reshaping the industry