Long-haul key to hotel recovery as European tourism rebounds

Despite harsh economic headwinds, a cost of living crisis, high inflation and concerns over the ongoing war in Ukraine, Europeans don’t want to give up on their holidays it would seem.

The outlook for travel to Europe remains perhaps surprisingly promising under the challenging circumstances and travel volumes reached between 75-80 per cent of 2019 levels across Europe last year, with that rebound expected to continue well into 2023.

However, ongoing recovery may be at a slower pace, according to the European Travel Commission (ETC). Looking forward, it believes international travel to Europe will catch up with pre-pandemic levels in 2025, while domestic travel will fully recover in 2024.

But while Europeans are reluctant to give up on travelling – especially in order to follow the sun – the continent is yet to welcome back long-haul travellers in quite the same numbers, and that remains a concern for the hospitality industry.

“As European short-haul travel is well on its way to recovery, the tourism industry’s attention has now turned to long-haul arrivals,” says Luís Araújo, ETC’s President. “We can expect the long-awaited return of Asia Pacific visitors in the coming months.”

Currently, southern Mediterranean destinations have enjoyed the fastest recovery, with holidaymakers flocking to Turkey (-2 per cent pre-pandemic) to benefit from a weaker lira, with Greece (-6 per cent), and Portugal (-7 per cent) also approaching 2019 levels.Those figures were recently backed by travel giant Tui, which said in early April that bookings and trends for the Easter holidays showed strong demand across all markets for sunshine destinations, including the Canary Islands, Turkey, mainland Spain and the Balearics, Egypt and Greece.

Tui sees Easter numbers up

Over 500,000 customers went on holiday with Tui over the Easter period, with the company saying that the load factor was expected to be around 95 per cent, which was broadly in line with pre-Covid levels. However, the travel group noted that customers continued to book at shorter notice and biased towards more cost-predictable package holidays and all-inclusive offers.  

"Booking momentum remains encouraging, and the travel trends and strong demand for the Easter holidays are a healthy signal for the upcoming summer. Based on trends to date and as we have said in March, we continue to anticipate capacity to be close to pre-pandemic levels. We expect a good summer 2023," said an optimistic Sebastian Ebel, Tui Group CEO.

Significantly, for many travellers in Europe the Easter holidays represented their first opportunity to take a longer vacation and Tui said that demand has been particularly strong for destinations around the Mediterranean as well as the Canaries, the top holiday regions for the UK and the German markets, which both saw record individual booking days.

Corralejo Beach (Grandes Playas de Corralejo) on Fuerteventura

In the four weeks to 5 February, bookings were around 10 percent higher than pre-pandemic 2019 levels, with prices also up, Tui reported.

Not surprisingly, Eastern Europe destinations have been the slowest to recover, primarily because of the lack of Russian visitors. As a result, the sharpest declines have been seen in Finland (down 38 per cent), Lithuania, Latvia, and Romania (all minus 42 per cent) for full year 2022.

Long-haul travel remains weak

As the ETC pointed out, long-haul travel has been a key weakness in Europe amid the post-pandemic rebound, exacerbated by the slower re-opening of Asia Pacific countries. However, booking data did see an uptick in the middle of last year, mainly from the Southwest Pacific and South Asia regions.

As the Asia Pacific region broadly reopened over the second half of 2022, travel demand from the region to Europe is expected to rebound, especially after the end of the ‘zero-Covid’ policy in China.

Chinese traveller numbers are expected to increase from the second quarter of 2023, as the logistics around restoring flight routes to reconnect China to the rest of the world will inevitably take time. Furthermore, most Chinese travellers need to acquire a visa to travel and many may need to renew their passports.

In the meantime, Transatlantic travel is expected to continue making a significant contribution. The US has lead the recovery of long-haul travel to Europe, thanks to short-lived and lighter travel restrictions, plus the strength of the dollar against the euro. Arrivals from this market to Europe are expected to recover to 82 per cent of 2019 volumes during 2023.

Their significance is unquestionable, as Americans spent $17.4 billion travelling abroad in February, a record for the US, according to the National Travel and Tourism Office (NTO), which says the US is currently recording a monthly deficit on travel and tourism-related activities, which had not happened prior to July 2021.

Full recovery still some way off

The ETC and Tourism Economics and European Tourism Association (ETOA) said last month that the return of long-haul arrivals is necessary to complete recovery of visitor spend in Europe. Long-haul visitors accounted for 25 per cent of the international nights spent in Europe prior to Covid-19.“Visitors who come from further away tend to spend more money and stay for longer periods of time, providing greater value to European destinations. We are teaming up with many of our member destinations this year to reactivate long-haul markets. 2023 will be a turning point for international tourism recovery, and this is the ideal moment to re-establish Europe as the top global travel destination,” said Araujo.

“People worldwide are continuing to prioritise experiences, including travel, and European cities and countries should seize this opportunity to benefit as preferred destinations,” David Goodger, director, Tourism Economics added. 

However, the recovery from China is likely to be gradual, with forward data bookings showing that Chinese travellers currently still favour domestic travel and strong hotel bookings in the country. In 2023, travel from China to European destinations is projected to remain 60-70 per cent lower than pre-pandemic levels and Tourism Economics does not anticipate a full recovery until 2026.

Tom Jenkins, CEO, ETOA reflected that the arrival of Chinese visitors transformed some destinations in Europe and their absence since 2020 has been sorely felt.“The anticipated return of real volumes in 2024 enables these destinations to invest again. This recovery is not certain. All sorts of barriers lie in the way,” he warned. “So where we can do the right thing, we should. Visas must be simplified and issued promptly. Every effort must be made to make these visitors welcome”.

Certainly the hotel European hotel sector will be hoping that things can be done to expedite the return of Chinese tourists. For now, inter-European visitors and the ongoing pent up demand to travel are boosting many locations but to normalise in the longer term the market needs visitors from further afield.