Summer gets more expensive for tourists

Tourists should expect sharply higher prices for hotels and air tickets this summer. The appetite for travel in all parts of the world is so strong that prices are being pushed ever higher. The recovery of the international tourism sector will surpass pre-corona levels this year. Good news for tourist hotels, restaurants and airlines. Consumers are clearly less well off.

This is according to research by credit insurer Allianz Trade (see annex). "Global GDP grew by 3.2% last year. You would expect the limited growth especially in Europe to make consumers more wait-and-see. But the opposite is the case. The appetite for travel is only increasing. At the same time, many airlines are facing shortages of aircraft, labour and spare parts. Then prices can only go up,’ says Johan Geeroms, Director Risk Underwriting Benelux of Allianz Trade.

Europe is fully benefiting from the tourism boom. Geeroms points to nice ‘perks’ like the Olympics in France and the European Football Championships in Germany. "The rise in the price of air tickets is much faster than inflation, but that does not seem to bother consumers. People are willing to accept the higher prices. If necessary, then not such a faraway trip but something closer to home." In 2023, as many as 1.3 billion people travelled internationally, up 33% from the previous year.

According to Geeroms, consumers increasingly consider travel an essential part of their lives and take it into account within their household budgets. ‘The experience is apparently worth the high cost,’ he says. There is little evidence of flight embarrassment, according to Geeroms. "There seems to be increasing “climate fatigue”. As if more and more people are turning away from the overload of climate information. People have other concerns on their minds: energy prices, food inflation, the war in our backyard."

Airlines are currently facing capacity constraints. This is largely due to bottlenecks in the supply chain since the pandemic and ongoing safety issues at Boeing. In addition, airlines are trying to reduce their CO2 emissions by removing old aircraft from the fleet, further limiting capacity. The average age of aircraft withdrawal has fallen from 27 years before the pandemic to 23 in 2023.

Allianz Trade estimates the total revenue growth of the global aviation sector to be around 6.5% this year. This makes aviation the only sector whose recovery after corona shows no decline. Total sales of $967 billion will come in sharply higher than the $838 billion in 2019 (the pre-pandemic level).  According to the International Air Transport Association (IATA), net profit for the industry this year comes to $30.5 billion. Clearly higher than $27.4 billion for 2023.