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 percent lower this year than in 2019.
To minimize the 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.
Travel Industry Continues to Struggle
The report states that European tourism growth is expected to remain below 2019 levels until 2023. During the first four months of the year, Europe saw a 44 percent decline in international tourist arrivals compared to the same period in 2019. Tourism jobs losses in Europe, it adds, in 2020 could be monumental, ranging between 14.2 million and 29.5 million.
Data reported by destinations to the months of April and May reflect the level of the disruption caused by the pandemic. Croatia (86 percent) and Cyprus (78 percent) saw the biggest declines reflecting the sizable losses of key source markets, such as Italy and the U.K., which were heavily impacted by the pandemic. Despite Iceland’s (52 percent) 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 open its border to international travel this summer.
Depressed Bookings Seen Across Europe
Latest data available showed a 96.9 percent decline in bookings to Europe across all subregions over the period January to 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 percent within European country destinations, while short-haul arrivals amount for 77 percent 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.