Europeans are beginning to cut back on travel budgets as rising household costs take a toll on disposable incomes, according to online room-reservations specialist Trivago NV.
Data for the November-January reservations period shows an increased propensity for people to favor cheaper hotels and shorter trips, with more clicks for lower-priced options than for the same period in 2019, Trivago chief financial officer Matthias Tillmann said.
At the same time, bookings this quarter via the German company’s Web site are currently around the level they were before the COVID-19 crisis roiled global travel, Tillman said during a Morgan Stanley conference in Barcelona.
Photo: AFP
The trends suggest that while Europeans are becoming more cost-conscious, they are so far not abandoning vacations and travel completely. Such a shift would likely favor low-cost airlines such as 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 percent 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 Web site 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.
Meanwhile, online travel agency eDreams, whose platform offers flights, holiday packages and car rentals, has seen average revenue per user drop by 4 euros (US$4.14) to 80 euros this quarter, as more people subscribe to its Prime service, offering steeper discounts, the company said in an earnings release.
eDreams CEO Dana Dunne said that the Barcelona-based company 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 percent 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 have said demand remains strong. Virgin Atlantic Airways Ltd CEO Shai Weiss suggested this month that people are more likely to spend money on a holiday than buy a new refrigerator as the COVID-19 pandemic eases.
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