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European tourism resilient in face of low consumer confidence, European Travel Commission finds

Elizabeth BakerBy Elizabeth BakerNovember 15, 20223 Mins Read

According to the recent edition of the European Tourism Trends & Prospects quarterly report from the European Travel Commission (ETC), Europe is expected to recover close to 75% of 2019 travel volumes by the end of 2022.

However, the report predicts the winter will not be without its threats as a looming recession and higher inflation across Europe will weigh on consumer spending and tourism demand, delaying but not derailing the recovery. The prolonged war in Ukraine and additional travel restrictions for Russian tourists across Europe are also projected also push back the recovery in Eastern Europe.

In the face of economic uncertainty and surging inflation, ETC predicted that travelers will favor short-haul trips. In September 2022, consumer confidence in France hit a nine-year low. Similar trends have also been witnessed in other major source markets, such as the UK and Germany. Overall, the price of holidays is expected to be a key deciding factor for households as they grapple with having less disposable income. This may be to Europe’s benefit as intra-European holidays, as well as domestic travel, tend to be cheaper than longer-haul alternatives. Short-haul travel currently makes up around 72% of total visits in Europe and is set to grow in popularity for the remainder of the year.

The research revealed that long-haul travel into Europe is still significantly depressed, hampered by restrictions and lingering negative sentiment from Asia and the Pacific. The Chinese market, in particular, has shown minimal progress toward a recovery due to the slower removal of travel restrictions. However, transatlantic tourism was observed to have received a boost from American holidaymakers benefitting from the strength of the US dollar – which has appreciated around 20% against the euro over the last year.

A strengthened dollar has already proven a lifeline to many European destinations, with the latest data showing that three in five reporting countries have recovered at least 70% of 2019 US travel volumes so far this year. A number of destinations exceeded 2019 travel demand: Turkey (+61%) saw the strongest rebound, followed by Portugal (+17%), Lithuania (+7%), Montenegro (+6%) and Poland (+6%).

Luís Araújo, president of ETC, said, “European tourism is proving exceptionally resilient to inflation. While the cost-of-living crisis is causing many to change their approach to travel, it is not dampening their desire to explore Europe completely. Short-haul travel will be a lifeline for the sector over the next months, as more travelers opt for shorter and closer trips. As we continue to navigate the challenges brought about by global uncertainty, it is crucial to rebuild a sector that keeps sustainability front of mind.”

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