European visitors return to enjoy entertainment and shopping in Germany

Expect European guests this summer

While plenty of foreign visitors can be expected this summer, they are less likely to have traveled very far.

The card turnover data shows that the main influx of international visitors is from other European countries, within a relatively short travel distance to Germany. The Czech Republic in particular is the only country in Top 5 for both 2020/2021 and in 2022 (see figure 2).

It should also be noted that of the top five countries in terms of Q1 2022 growth, the top three (The Czech Republic, Denmark and the UK) are all non-Euro countries. This means that there is still a need to consider currency conversion as a factor for transactions.

The high representation of European countries fit the pattern from last year, where we also saw see more inter-European travel and fewer long-distance trips. Asian and North American travelers can still be expected, but in smaller numbers than before Covid. Both regions still face significant Covid-related uncertainty and the war in Ukraine affects available travel routes from Asia.

This is likely going to impact both basket size and product demand for merchants. While many Asian tourists traditionally spend a lot on high-end luxury items such as clothes, jewelry, perfume and accessories, European customers typically spend less per individual ticket but have a higher volume of purchases.

Entertainment and luxuries in high demand

The card turnover data trends also clearly show that the European guests will arrive eager to amuse and enjoy themselves.

The numbers for Q1 2021 vs. Q1 2022 shows a clear indication that travelers are now coming to Germany to spend money on entertainment (+805.6 percent growth), hotels (+372.8 percent growth), restaurants & bars (+351.2 percent growth) and clothing & shoes (+281.3 percent growth).

In contrast, the highest international card turnover growth from 2020 to 2021 was mainly in sectors connected with the more essential elements of travel – transportation, lodging and food.

So, it would seem that merchants in the traditional tourist verticals should prepare for a busy season, especially in the entertainment and shopping sectors. For example Czech visitors, beauty and barber shops topped the list of spending categories.

Digital payments and DCC are more important than ever

While pre-Covid spending patterns seem to return in terms of what consumers are buying, we are seeing more permanent changes to how they are paying for their purchases. Covid has accelerated the already widespread transition from cash to digital payment methods, both in areas with high and low penetration of digital payments.

It is clear that in virtually all areas and verticals, the use of digital payments is now considered the default, not the exception. In particular, the use of contactless card payments has increased significantly during Covid, with a 70.2 percent increase from Q1 2021 to Q1 2022 (see figure 3).

In the same period, the use of Dynamic Currency Conversion (DCC), which allows shoppers to pay for a purchase in their native currency when shopping abroad, increased by +350 percent (see figure 4). While this increase should be viewed in light of the low volume of international travelers during Covid, it none the less sends a strong signal that consumers respond favorably to the option of DCC.

Hopefully, these insights will prove valuable for German merchants looking to prepare and optimize their chances of attracting foreign visitors. For merchants who want further advice, Nets offers these tips:

1. Prepare for a busy summer with mostly European visitors

Visitors are returning to all areas of Germany, not just the border regions, and the latest numbers show Germany experiencing higher growth than other DACH countries. The increase in visitors aligns with the analysis of the Oxford University Stringency index, which indicates that the growth in foreign visitors will continue now Covid restrictions have been relaxed.

The largest growth in travelers is from other European countries close to Germany, but long-distance travelers should not be ignored, as they frequently spend large amounts per purchase.

Merchants should use this knowledge to prepare for a return to pre-Covid levels of activity.

2. Expect entertainment, clothes, food and beverages to be in high demand

While the main spending during Covid was the more essential elements of travel, such as transportation and lodging, there is a clear trend from the data that the mostly European visitors coming now will frequently be seeking entertainment, upgrade their wardrobe and indulge themselves in German restaurants and bars. These sectors can look forward to significant growth.

3. Offer contactless digital payments and DCC

Nets data indicates a clear upward trend in the use of both contactless payment and Dynamic Currency Conversion (DCC). Both technologies provide advantages for both merchant and consumer, such as faster checkout and more transparency. And removes the need for tourists to carry cash.

Offering DCC enables customers to choose whether to pay in their own currency or the local currency. DCC increases both convenience and transparency for consumers, by showing them the price in a currency they are familiar with, thereby preventing any unpleasant surprises on their bank statement.