According to the European Travel Commission’s (ETC) latest quarterly report “European Tourism: Trends & Prospects”, the global health crisis has left the tourism sector in Europe facing a crisis like no other, with heightened uncertainty surrounding its recovery. Latest forecasts indicate that travel to Europe is expected to be 54% lower this year than in 2019.
To minimize the knock-on effects of the outbreak, economies in Europe are starting to reopen while stimulating tourism to salvage the summer holiday season and limit the financial fallout from the pandemic. The pace of recovery by destination will vary and will depend on the extent to which they rely on international source markets and the revival of consumer confidence.
The travel industry continues to struggle in the face of the ongoing pandemic
The report states that the impact of the global health crisis is becoming clear with European tourism growth expected to remain below 2019 levels until 2023. During the first four months of the year, Europe saw a dramatic 44% decline in international tourist arrivals compared to the same period in 2019. Tourism job losses in Europe in 2020 could be monumental, ranging between 14.2mn to 29.5mn Uncertainty still dominates and the duration of pandemic restrictions will be key to determine the losses in the sector.
Data reported by destinations to the months of April/May reflect the level of the disruption caused by the pandemic. Croatia (-86%) and Cyprus (-78%) saw the biggest declines reflecting the sizeable losses of key source markets, such as Italy and the UK, which were heavily impacted by the pandemic. Despite Iceland’s (-52%) steep decline in arrivals, success in taming the spread of the virus owing to its rigorous tracking and tracing system has allowed the Nordic island to confidently open its border to international travel this summer.
Depressed bookings have seen across all Europe
The latest data available showed a -96.9% decline in bookings to Europe across all subregions over the period January-May 2020 compared to the same period last year. On a positive note, as consumer activity is starting to pick up, data has also shown a jump in flight bookings for destinations such as Greece, Portugal, and Spain for July and August. Leisure visitors account for the bulk of new tickets purchased, but recovery has been stronger among travelers aiming to visit friends and relatives.
Opportunity for recovery in domestic and short-haul travel
The recovery of travel to all destinations worldwide will depend on economic factors, the speed with which travel restrictions are lifted, the health of the aviation industry, and the risk aversion of potential travelers. The likelihood of a stable and quick recovery of travel demand is likely to be greater for destinations that rely more heavily on domestic and short-haul travelers. Lower cost of travel, remaining international travel restrictions, uncertainty around transport availability as well as a heightened risk aversion is likely to increase consumer preference for traveling closer to home.
The average share of domestic travelers is at 44.5% within European country destinations, while short-haul arrivals amount to 77% of all travelers. Combining both arrivals from within the country and reliance on short-haul travel, Germany, Norway and Romania are the most resilient and likely to be quicker and more stable in recovery. On the contrary, Iceland, Montenegro and Croatia have the lowest score with greater risk in recovery. These destinations have small domestic tourism markets and a much higher reliance on international demand, including a sizable proportion of travel from markets outside Europe which will be more likely to be subject to restrictions for longer.
New trends in tourism
The report notes that tourism as we knew it has ceased to exist, while success lies on swiftly embracing digitalization and leveraging new technologies to adapt to the “new normal” and to shifts in consumer behavior. A sector traditionally characterized by human interactions will now have to provide the same valuable intangible aspects through more touchless methods in a more digitalized world. Sustainability will be key in building a resilient and more competitive sector through the implementation of a model that is economically, socially, and environmentally viable in the long-term.
Eduardo Santander, Executive Director of ETC stated: “The COVID-19 pandemic has had a profound impact across the sector. We have been talking for so long about sustainable growth, climate change, digitalization, and innovation, this is an opportunity to press the reset button, challenge pre-established models and finally take all these matters seriously. We must use the recovery from this terrible situation to accelerate the transformation and shift to the tourism of tomorrow.”
