NewsNovember 16, 2019

The rising online penetration to the German travel market

Germany, with its strong economy and high consumer confidence, is Europe’s largest travel market, and while a number of recent surveys show that it’s likely to remain that way for the foreseeable future, the online penetration contributes to increase in this market.

The majority of Germans still book travel offline, but online and mobile are growing quickly. Rising internet penetration, at 96% in 2019, will help boost online travel revenue to €28.8 billion in 2019, with a 45% online penetration rate, according to the Phocuswright report.

Offline channels, including travel agents, as well as airline and hotel call centers, have historically accounted for the majority of travel gross bookings. However, online distribution, powered by supplier-direct web and mobile investments, is expected to represent more than half of all travel revenue by 2022.

Phocuswright’s German Online Travel Overview reports, although Germany’s airlines continue to dominate the supplier-direct online market, the largest shift away from offline distribution will come in the rail market, where online channels are predicted to represent over 62% of all revenue in 2023. Offline gross bookings will fall to 44% of car rental revenue by 2023, as market leaders Sixt, Europcar, and Avis spend heavily on their branded online websites and mobile apps. During the five-year forecast period, Germany’s airlines, tour operators and hotels will rely on offline distribution for more than half of their gross bookings.

Germany boasts a smartphone penetration rate of 80%, making smartphone use nearly ubiquitous throughout the country. Online transactions are gaining momentum, and 31% of online purchases are now done through PayPal. In the travel market, mobile gross bookings are projected to account for 30% of online travel revenue in 2019, increasing to 39% by 2023.

Every travel supplier segment is expected to experience mobile revenue growth over the next five years. The rail market will again lead the digital transformation, with Deutsche Bahn’s DB Navigator app becoming the company’s fastest-growing booking channel in 2018. By 2023, mobile bookings will account for two-thirds of all rail online revenue.