The most recent edition of the European Tourism Trends and Prospects quarterly report predicts that travel demand will show resilience amid risks on multiple fronts.
Domestic travel is expected to fully recover in 2022 while international travel is not expected to exceed 2019 levels until 2025, according to the findings from the European Travel Commission (ETC).
However European tourism will continue to recover throughout the year, albeit at a slower pace than previously hoped, it adds. The report looked at the impact of the Covid-19 pandemic and the current economic and geopolitical headwinds affecting the European tourism industry.
Year-to-year data for Q1 2022 showed that arrivals are estimated to be 43% lower on a weighted basis relative to 2019 across all reporting destinations. This represents a significant improvement compared to the 60% decline seen in the previous quarter.
The quickest rebounds based on data to February were reported by Serbia and Turkey. Other destinations recovering at a faster rate based on data from February to March include Bulgaria, Austria, Spain and Monaco, and Croatia.
ETC President Luis Araujo said: “Over the course of the pandemic, the European tourism sector has become adept at dealing with uncertainties and challenges. The sector is steadily recovering from Covid-19 and there is cause for optimism.
“Nevertheless, European tourism will have to maintain this fortitude throughout the year as Europe continues to deal with the significant fallout from the ongoing Russo-Ukrainian conflict.
“ETC calls on EU institutions to continue to provide sufficient and timely financial aid and other support to the sector, especially to destinations heavily reliant on tourism from Russia and Ukraine.”
Covid-19 loosens grip on European tourism
The report shows that Covid-19 is gradually receding as the primary factor influencing consumer travel plans. Helped by vaccines and boosters, as well as countries’ health protocols and certifications, international travellers are now less hesitant about visiting Europe.
Many destinations such as Spain, France and Italy have removed the requirement for Covid testing prior to travel, conditional on vaccination status. As a result, Western Europe is therefore forecast to be the best performing region worldwide this year, albeit 24% below 2019 levels.
The United States remains among the best performing of all long-haul source markets. Annual average growth from the US to Europe is expected to be 33.6% in the five year period of 2021 to 2026, with the fastest increase seen in Northern Europe (41.5%). Overall, transatlantic travel between the US and Europe in 2022 will be one of the key drivers of the European travel sector’s recovery.
On the other hand, there have been no immediate signs of Chinese tourist arrivals returning to pre-pandemic levels. China, the world’s largest travel spender, is currently enduring a severe outbreak of the Omicron variant in Shanghai and other large cities prompting authorities to reimpose strict lockdowns and mandatory testing to control the spread of the virus.
More than 50% of reporting destinations saw declines of more than 90% in Chinese tourist arrivals compared to 2019.
Russo-Ukraine Conflict to impact travel sector
The Russo-Ukraine conflict is expected to result in less outbound travel from both markets. Neighbouring countries and those most reliant on Russia and Ukraine as source markets will be worst affected in the short term when it comes to tourism performance.
Eastern Europe’s recovery has been pushed back to 2025 due to the war, with arrivals forecast to be 43% lower in 2022 compared to 2019.
The impact of the invasion could mostly hurt destinations such as Cyprus, Montenegro, Latvia, Finland, Estonia and Lithuania where Russia made up at least 10% of total inbound travel in 2019.
Beyond the visitor impacts, Russian tourists tend to be high spenders meaning that an even larger impact will be felt in terms of tourism expenditure in these destinations. In 2019, Russian spending contributed to 34% of total expenditure in Montenegro, 25% in Cyprus and 16% in Latvia. Overall, no immediate recovery is expected for countries that heavily rely on Russian tourism in the near future.
Besides the direct effects of reduced travel both from Russia and Ukraine, the conflict has created other problems for the European travel sector. The inflationary effect of economic sanctions on Russia will continue to exacerbate rising jet fuel prices and may cause airfare price hikes this year. Other rising costs such as food may erode consumer demand and further impact travel in a range of markets. Furthermore, the closure of Russian, Ukrainian, Moldovan and Belarusian airspace to most Western European carriers will impact European-Asian air connectivity.
In addition, the impact of the war in Ukraine could affect travel sentiment to Europe from overseas markets. A recent survey conducted by MMGY Travel Intelligence shows that 62% of US travellers planning to visit Europe stated concerns about the war in Ukraine spreading to nearby countries as a factor impacting plans, which is double the number of respondents that mentioned Covid-19 health and safety concerns as a factor. Nevertheless, the US is expected to remain among the top performers in 2022 compared to other long-haul source markets.