Strikes, inflation, now war: Uncertainty mounts for Europe’s travel season
Diego Sanz, a tour guide on Spain’s southeastern Mediterranean coast, received his first international group booking in more than a year in mid-February. It was, he thought, an omen of better things to come.
“Here we live in paradise, and we were sure that when the Covid restrictions were lifted, we would have no more problems and tourists would come back to us like bees come to nectar,” said Sanz, sitting in a quiet cafe at the end of March in the port city of Alicante.
Then Russia invaded Ukraine and abruptly stopped new international bookings. In the first week of the war alone, airline bookings in Europe fell 23% and transatlantic bookings to European countries fell 13%, according to travel data firm ForwardKeys.
“We’re in the middle of a big storm,” Sanz said, literally and figuratively. Outside the cafe window, the Costa Blanca region was experiencing one of the heaviest rainstorms in its history, with 18 straight days of heavy downpours causing flash flooding and washed out roads.
“The sun will come back, but what will happen to the war and the economic problems? He continued. “I don’t know if we will be able to make a profit this summer.”
Many European countries, including Spain, Greece, Italy and Croatia, which rely heavily on tourism, had hoped to start the travel season early to make up for lost revenue due to the pandemic. That now seems unlikely. So far, the most affected destinations are those near Ukraine, including Poland, Bulgaria, Croatia, Estonia and Hungary, which have seen a 30-50% drop in bookings, according to ForwardKeys. Many tour operators in these countries are embroiled in their efforts to help refugees fleeing Russian forces, unable to contemplate the impact war might have on their livelihoods.
Across the continent, the damage is already being felt with rising fuel prices, supply chain issues, inflation and strikes. Energy prices in Italy have jumped in recent months, which worries hoteliers. Truckers in Spain have been on strike for more than 10 days, causing sporadic shortages of food and goods. Hotels and restaurants are scrambling to find affordable substitutes for key supplies like wheat and sunflower seed oil, of which 75% to 80% of the world’s supply comes from Russia and Ukraine, according to the Food Program United Nations world.
“We try to be flexible and find substitutes for products that are in short supply, such as using olive oil instead of sunflower oil, so it doesn’t affect the customer experience,” he said. said Javier Garcia Cuenca, Vice President of Magic Costa Blanca Hotels and Resorts. “But the problem is cost management, it’s getting more expensive.”
Croatia often ranks among Europe’s most tourism-dependent economies, with tourism accounting for around a fifth of the tiny nation’s gross domestic product, according to the Croatian Bureau of Statistics. The country’s main attraction, its slice of the Adriatic coast, attracted most of Croatia’s 13.8 million visitors and 84.1 million overnight stays in 2021. It drove GDP growth of 10.4% from year on year according to the Bureau of Statistics.
Although cancellations have been minimal in Croatia so far this year, the country is also experiencing a slowdown in bookings.
Dubrovnik Boats, a private tour and charter company with a large majority of American customers, expected a record year before the war. But then the booking rate suddenly dropped by 70%.
“For a foreigner, we are one centimeter from Ukraine on a map,” said Niksa Smojver, the owner.
A significant concern this year for marine charter companies is rising gasoline prices and the potential for fuel shortages. For Dubrovnik Boats, operating a round trip between Dubrovnik hotspots and Hvar now costs around $750 more than it did last year. So far, the company has not embraced the passenger fare increase, but may have to.
However, Smojver remains hopeful. “After the corona, people are fed up and everyone wants to travel. This season could be one of the best we’ve had. Not a record, but strong,” he said.
In other parts of Europe, particularly in countries dependent on tourism, the outlook was bleaker. Cancellations in Italy dampened an increasingly optimistic attitude among tour guides and operators, although some expressed hope the war would end and save the season.
“The mood in general is depressing, because everything seemed to be over and instead there was a new downturn,” said Margherita Capponi, a Rome-based tour guide.
Bernabò Bocca, president of the Italian hotel association Federalberghi, said he was very concerned about energy costs, which have skyrocketed in Italy in recent months. “Hotels are energy-intensive businesses, they are open seven days a week, 24 hours a day,” he said. “The cost of energy has become a very important component, a price that the whole world pays.”
Before the pandemic, tourism accounted for around 14% of Italy’s GDP, according to the country’s tourism ministry, and Italy’s national tourism agency, ENIT, said that in 2019 more than 63 million foreigners went to Italy.
At a recent trade show, Italian Tourism Minister Massimo Garavaglia cited a February survey of US traveler sentiment by market research firm MMGY Global, which reported that 47% of 4,500 respondents were waiting to see how the situation in Ukraine would evolve before making plans to visit Europe. “It’s clear that if half the Americans don’t come to Europe, it will be a tragedy,” he said.
However, other tour operators large and small are still expressing optimism for the upcoming season, despite war and coronavirus concerns. Last week, online travel agency Expedia announced predictions for a strong summer in Europe, saying interest from American travelers wanting to visit Britain, Germany and France this summer has increased fivefold from at the same time in 2020.
On the Costa Blanca, members of the local hotel industry have signed fixed-price contracts with tour operators, which should lead to fewer cancellations. The main challenge for hotels will be to manage rising costs and adapt to supply chain issues.
Magic Costa Blanca’s Cuenca said it had yet to raise its hotel rates and fees and expressed cautious optimism for the summer, having already booked about half of its hotel rooms for the season. “We will have to watch inflation and we may have to adjust our rates to maintain our profit margins,” he said.
Last year, the hotel chain had a successful summer season attracting the domestic Spanish market, but Cuenca was unable to open any of its hotels due to weak demand from the international market, especially British tourists. facing strict and unpredictable travel rules at home.
“We won’t have as strong a year as expected,” he said. “But there’s still high demand as people realized during Covid that they could die and they wouldn’t live forever, so they are prioritizing holidays and leisure.”
Sitting in the lobby of the Port Benidorm hotel last week, Toni Mayor, president of HOSBEC, the Costa Blanca hotel association, said the hotel’s 89% occupancy rate, mostly from British tourists, was very encouraging. “They’re coming back,” he said.
Wendy Hartfield, a history tutor from Yorkshire, England, arrived in Benidorm last week hoping to soak up the sun and play golf but instead spent most of her holiday reading at the interior due to torrential rains.
“I want to come back this summer, but with the way everything is going it might be too expensive,” Hartfield said. “We have to pay the bills at home first.”
This article originally appeared in The New York Times.