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Insight Comment |
European travel could return to pre-pandemic levels by as early as 2023, although a number of issues may conspire to delay this recovery by up to two years.
Speaking at the Resort and Residential Hospitality Forum in Portugal, Tourism Economics director of global forecasting Helen McDermott said the recovery in Europe had originally been predicted to be in place by 2024.
However, in a presentation entitled Economics Keynote: Rebuilding After the Crisis, she said a combination of pent-up demand and the financial savings forced on consumers by extended lockdowns could speed up the process.
This would mean that the number of inbound travellers in Europe last seen in 2019, before the Covid-19 pandemic led to the collapse of international travel, could be achieved again by 2023.
McDermott added the process has been further assisted by the faster than expected recovery in global GDP, with Tourism Economics revising its original prediction in April that global GDP would be down by 2% this year to less than 1%.
The situation has also been helped by the fact that unlike the financial crash in 2008, there has been less financial scarring with fewer company collapses during the pandemic.
Despite the good news she also warned that there were still causes for concern, with the main one being the introduction of tighter restrictions once again on travellers in the event of a new Covid-19 wave in Europe.
While McDermott doesn’t believe new restrictions will be as prohibitive as the original rules, she added: “We will see some tighter public health restrictions which will impact on travel activity and confidence to some degree.”
She also argued that the emergence of new strains and mutations of the virus could also delay the recovery while inflation, and its impact on household incomes, could also have a negative impact.
Vaccine Optimism
Despite the potential for more trouble, McDermott remained optimistic about Europe’s recovery and this has also been driven by the fact that Europe’s population proportionally has the highest levels of vaccination, with 54% fully vaccinated, in the world.
She added this is more than the 50% found in North America, 47% in South America, 44% in Oceania, 40% vaccinated in Asia and just 5% in Africa.
“This gives it [Europe], a very strong comparative advantage in terms of international travel,” McDermott said.
However, she warned that despite the high levels of vaccination in Europe, some countries may still be impacted due to their choice of vaccine.
McDermott said: “There are some nations that have not fully recognised the [Russian-created] Sputnik type of vaccine and currently that is a barrier for travel from Russia into some destinations.”
She also warned that the era of low cost travel, which has been particularly prevalent in Europe and which has driven demand for the best part of a decade, could be coming to an end.
McDermott said that average room rates in 2021 remain higher than they were in 2019, although she added this could be driven by hoteliers eager to make some money as occupancy levels are yet to recover to pre-pandemic levels.
She also argued that a renewed push on sustainability could also drive up travel costs, as airlines pass on any fuel price increases to the consumer, although she admitted it is currently unclear how much governments will act on this.
But overall, McDermott was confident that the European travel industry will recover, with domestic leisure trips set to drive the process.
She said in 2019, domestic travel accounted for 58% of all Europe’s inbound and domestic guest nights, rising to 74% in 2021 and still predicted to be at 62% by 2025, when the overall market should be back to 2019 levels.