Over the past months, chaos at major airports in the United States and Europe has dominated travel-related news headlines. The world is facing an acute shortage of labour, and the travel industry in particular has been reeling the most from it.

Data by Eurostat, the statistical department of the European Union, suggests a remarkable recovery this year with respect to short-term rental accommodation in Europe’s popular travel destinations. The global travel sector appears to have bounced back from pandemic-related setbacks. Amid pent-up demand, from airports to hotels to airlines, every market participant is busy hiring workers. Let us discuss some factors that indicate an optimistic phase for the travel industry.

Bookings on the rise

Both 2020 and 2021 were rough years for the sector. The pandemic dealt a big blow to the global economy, and it was the travel industry that faced the biggest pressure to cut jobs due to falling revenue. Over the latter half of 2021, there were murmurs about a recovery, thanks to people being willing to travel despite the rising inflation. Now, Eurostat’s data has provided evidence that people have in fact travelled in great numbers. Most EU countries have staged a near-complete recovery with respect to online short-term stay bookings.

Compared with 2019, the bookings have risen for every month beginning February 2022. In fact, the increase was over 10% in February. France has emerged as the best performer among all EU countries, with a whopping 31% rise compared with 2019 levels. Online bookings this year have been healthier when compared with the first half of 2021.

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Prices to increase at a slower pace

Inflation has dampened the mood of consumers in all major cities of the world, and travel-related costs are one major pain area. Hotel stays and air tickets have become costlier, not only because demand has grown exponentially but also because the supply side is under pressure. Travel businesses are offering higher pay to recruit staff, which adds to the cost of operations, which is ultimately borne by the consumers.

However, a forecast by the consulting firm American Express Global Business Travel indicates that hotel prices in major cities for business events might grow at a slower rate next year thanks to the expected slowdown in the global economy. The report mentions that demand is set to be high in 2023; however, there would not be much elbow room for the hotel industry to raise prices. Headline inflation in regions like North America and Europe is also expected to show signs of easing, on the back of central banks going for big rate hikes to tame record-high prices.

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Outlook

Even though it is difficult to predict the near-to-medium-term growth of any particular industry in the wake of an anticipated economic slowdown, the current trends – increased bookings and expected slow growth in prices – might bode well for the travel sector.

Written by: Kalkine Media

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