With national inflation rates increasing dramatically in recent months across Europe, the purchasing of cheaper tourism related products and services has allowed many European travelers to satisfy their desire of holidaying abroad while ensuring they can make ends meet back at home, found GlobalData, a leading data and analytics company.
Ralph Hollister, Travel and Tourism Analyst at GlobalData, comments: “This level of inflation would be expected to severely dampen demand for international travel. However, stories of packed airports across Europe continue to emerge, demonstrating that the pandemic induced demand for international travel is still present even with inflation squeezing levels of disposable income.”
The UK’s inflation rate has shown similar stark increases to the Eurozone in recent months. However, demand is still present for international travel across all social grades. A GlobalData survey shown below found that even in the less affluent social band of ‘DE’, one in five respondents (20.8%) stated that they are still planning to travel internationally this summer, with consumers in this category set to be impacted the most by inflation.
Hollister adds: “A significant portion of European travelers in less affluent social bands will still be able to travel by trading down in terms of the travel related products and services they purchase in the ‘pre’ and ‘during’ stages of a trip. This will certainly play into the hands of companies that already target budget travelers.”
For example, travelers that usually stay in midscale hotels may now lean towards budget forms of accommodation to keep costs down for their main summer holiday. This could play into the hands of low-cost providers such as Airbnb. With hosts likely feeling the pinch of inflation themselves, they may actually lower their prices to ensure occupancy is maximized during peak season and to remain competitive.
Hollister concludes: “The impact of inflation across Europe will no doubt extend the recovery timelines of travel and tourism companies. However, the strong desire of travelers to continue traveling as a period of economic downturn looms will be facilitated by trading down, with cheaper products and services being prioritized to counteract the impact of inflation.”
* The chart shows the percentage of consumers within each social grade who are planning a holiday in the UK, abroad or do not have one planned this summer. Percentages for each social grade do not sum to 100% as respondents could select both holiday in the UK and holiday abroad. Data is derived from GlobalData’s 2022 monthly survey of 2,000 respondents. AB: Higher & intermediate managerial, administrative, professional occupations. C1: Supervisory, clerical & junior managerial, administrative, professional occupations. C2: Skilled manual occupations. DE: Semi-skilled & unskilled manual occupations, unemployed and lowest grade occupations.