Travel groups enjoy resilient demand despite economic headwinds

Demand for travel is still booming despite worries over the global economy and cost of living, providing a boost for airlines and hotels ahead of an uncertain winter.

Hotel bookings for the fourth quarter have outpaced 2019 levels this year, according to figures compiled by travel company Amadeus, which aggregates data from 35,000 global hotel properties.

Henrik Kjellberg, chief executive of European holiday rentals company Awaze, said bookings were “holding up well over winter both in terms of volume and price”, adding that, “even in the event of a recession, I expect the travel industry will still perform well”.

Airline bookings data also show that recovery in travel has not slowed since a summer season that was so busy some airports in Europe were overwhelmed by the numbers of passengers.

Global flight bookings for September, October and November were 33 per cent below 2019 levels this week, an improvement on the summer when bookings were 40 per cent lower, according to travel industry data company ForwardKeys.

The flight data, drawn from an industry-wide ticketing database, covers all major national carriers and includes parts of Asia where flying is still well below normal levels. It does include sales from low-cost airlines, many of which have reported quicker recoveries and are flying close to or above 2019 levels.

“In the contest between the surge to recover from the pandemic and the cost of living crisis acting as a drag to slow things down, the recovery is holding the upper hand,” said Olivier Ponti, an executive at ForwardKeys.

Tour operator Tui this week said bookings in the UK, Germany and Netherland had been above pre-pandemic levels in recent weeks, and that people were spending more money than usual on longer or more expensive trips.

“This is encouraging and shows the current importance of holidays and travel experiences in the post-Corona era,” said outgoing Tui chief executive Fritz Joussen.

The recovery has come even as airlines raise ticket prices, primarily to pass on the higher cost of fuel.

Long-haul airline Virgin Atlantic expects winter revenue to exceed 2019 levels even though it plans to fly only 90 per cent of its pre-pandemic schedule.

Vinod Kannan, chief executive of Vistara, India’s second-largest airline, said “it has not come to the stage where we find demand dropping because of the fares”, noting that “people have not travelled for the past two years”.

Airline stocks have suffered in recent months despite the recovery in travel, as investors fret over high fuel prices and the weakening economic outlook.

Analysts say the biggest question facing the industry is whether demand can stay resilient in the face of a significant economic downturn.

Analysts at Bernstein calculate that European airlines’ fourth-quarter schedules show a full return to 2019 levels for transatlantic and intra-European flights, and are 9-15 per cent lower for trips to the rest of the world.

But they warned that winter demand “remains highly uncertain”.

Kannan said he thought that “through this year, through this winter, we should still be OK because of the rebounding up from Covid — and people still want to meet friends, relatives, and corporations. But what happens for 2023? We’ll have to wait and watch”.