Europeans are starting to cut back on holiday travel. Here’s why
Europeans are beginning to cut back on travel budgets as rising household costs take their toll on disposable incomes, according to online room-reservations specialist Trivago NV.
Data for the November-January period indicates an increased propensity for people to favor cheaper hotels and shorter trips, with more clicks for lower-priced options than at the equivalent time in 2019, Chief Financial Officer Matthias Tillmann said in an interview.
At the same time, bookings this quarter via the Dusseldorf, Germany-based company’s website are currently around the level they were before the coronavirus crisis roiled global travel, Tillman said during Morgan Stanley’s TMT conference in Barcelona.
The trends suggest that while Europeans are becoming more cost-conscious, they’re so far not abandoning vacations and travel completely. Such a shift would likely favor low-cost airlines like Ryanair Holdings Plc, which can gain in a recession as cash-scrapped customers trade down to more-affordable flights.
“It could be that people are looking for cheaper options or that they’re doing more research and trying to mitigate the high price environment,” Tillmann said, adding that travelers also appear to be reducing the length of their stay by 10% on average.
Mediterranean cities, where accommodation tends to be less costly, are proving especially popular, Tillmann said, “which might be an indication that people are looking for more value for money” Greece and Spain remain popular, while Istanbul has gone from being a top-20 destination into the leading five.
He said bookings through the Trivago website tend to come 30 to 60 days in advance of the check in, so that the company has “very little visibility” looking into next year.
Online travel agency eDreams, whose platform offers flights, holiday packages and car rental, has seen average revenue per user drop by 4 euros ($4.1) to 80 euros this quarter as more people subscribe to its Prime service, offering steeper discounts, the company said in an earnings release.
Chief Executive Officer Dana Dunne said by phone that Barcelona-based eDreams is also seeing consumers taking shorter trips, traveling nearer to home and booking closer to the time of departure than before. Still, bookings in October and the first week of November were up 45% versus 2019 levels.
Airlines and travel firms are coming off a bumper summer characterized by so-called revenge tourism as people spent lavishly on vacations and trips to see friends and family after two years of disruption from the pandemic.
While spiraling inflation and soaring household bills present a challenge, carriers say demand remains strong. Virgin Atlantic Airways Ltd. CEO Shai Weiss suggested this month that, post-Covid, people are more likely to spend money on a holiday than buy a new refrigerator.