European travel recovery continued in the second quarter of 2023, owing to high consumer demand despite stubborn inflation and increasing travel costs. On the intercontinental front, the USA proves to be the strongest long-haul source market to date this year, according to the latest report of the European Travel Commission
Europe’s tourism recovery is maintaining its momentum despite economic headwinds, reaching about
95% of 2019 levels of international tourist arrivals. Though inflation and increased travel costs are squeezing consumers’ wallets, travel spending is still prioritised over other discretionary expenses. The latest data available shows that one-quarter of reporting European destinations have surpassed pre-pandemic levels of foreign arrivals.
The European Travel Commission (ETC) “European Tourism: Trends & Prospects” report for the second
quarter of 2023, was released in July and provides a comprehensive analysis of the region’s latest tourism and macroeconomic developments.
Consumers becoming increasingly price-driven
This summer, many consumers will make their travel decisions with cost in mind, as weaker economic conditions put pressure on travellers’ budgets. Household finances and discretionary spending will remain strained going into the peak travel season in Europe (June to August), but this should not derail the overall recovery.
Travellers are still showing strong demand for travel despite economic woes. Considering this, it comes as no surprise that price sensitivity will continue to benefit destinations offering more value for money. Recent data up to May shows that value- for-money destinations are performing well, with Serbia (+27%), Bulgaria (+21%), Montenegro (+12%) and Turkey (+9%) among those leading the recovery.
European air volumes on the rise
The recovery in air traffic volumes was lagging behind consumer demand across Europe in 2022 and early 2023. However, the tide seems to be turning, with data up to June showing recovery edging closer to pre-pandemic levels. This can be attributed to increased airline capacity across both European and foreign airline carriers, which will hit the market in time for the peak summer months. European flight scheduling is returning to its pre-pandemic 2019 levels, with planned seat capacity at 96% this summer. The latest data also shows that European international Revenue Passenger Kilometers (RPKs) have continued a steady recovery, achieving 90.8% of 2019 levels in April.
It remains to be seen whether airline capacity can meet demand this summer, although current schedules suggest this will be sufficient. At the same time, potential disruptions from aviation strikes, labour shortages and war-related airspace closures still pose great uncertainty for the sector.
US leads overseas travel recovery to Europe
US travellers taking advantage of favourable exchange rates are expected to drive many European destinations’ recovery this summer. Most recent data shows that 52% of reporting destinations have surpassed pre-pandemic levels of US tourist arrivals so far this year. With continued high inflation and a potential recession weighing on American households, affordability will be a key factor in holidaymakers’ choice of travel destination within Europe.
Southern Mediterranean destinations such as Portugal (+79%), Turkey (+78%), and Montenegro (+43%) have reported substantial growth in arrivals from the US market. In Central/Eastern Europe, Latvia (+135%) and Poland (+51%) also recorded significant arrivals growth from the US. In the case of Latvia, the strong increases could be connected to visiting friends and relatives from the Latvian diaspora while journalists reporting on the Russia/Ukraine conflict as well as an influx of volunteers and military personnel could be contributing to Poland’s performance.
In Asia, Chinese and Japanese outbound tourism remains behind 2019 figures. Chinese arrivals are still 65.6% behind 2019 for the second quarter while overnights are 57% below 2019 numbers. Recent research by the ETC in June reported that “73% of surveyed Chinese expressed eagerness to travel to Europe in the following months”.
The outlook for Japanese demand to travel to Europe has remained relatively subdued. The average across reporting countries for arrivals stands at 65% below 2019 levels while overnights are 55.6% below 2019 levels.
By contrary, 37% of all reporting destinations showed growth in arrivals of Indian travellers relative to 2019. Out of these destinations, on average arrivals were 4.5% above pre-pandemic levels.
Commenting following the publication of the report, Miguel Sanz, ETC‘s President, said: “It is encouraging to see the positive recovery of international tourist arrivals in the first half of 2023. With this in mind, European destinations must be prepared to effectively manage the increased demand and return of travellers. Tourist strategies must embrace travel dispersal in order to support destinations in addressing overcrowding, while also spreading the benefits of tourism to less-travelled areas. Tourism can and should be leveraged as a social, economic, and sustainable force for good.”
