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Americans and Europeans cut Travel budgets during price storm



Europeans and Americans are cutting travel budgets amid escalating inflation which has put pressure on their living costs.

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Europeans and Americans are cutting travel budgets amid escalating inflation which has put pressure on their living costs.

According to online booking platform Trivago (Germany), Europeans are starting to cut their travel budgets due to the rising living cost that is eroding their disposable income.

According to Trivago, booking data for the period from November 2022 to January 2023 shows that an increasing trend in favor of budget hotels and short travel trips.  At the same time, bookings this quarter through Trivago's web platform are now at the same level as before the global outbreak of the Covid-19 pandemic.

Americans and Europeans cut Travel budgets during price storm

These data indicate that although Europeans are more cost-conscious, they haven't given up on traveling completely yet. Such a change will likely benefit low-cost carriers like Ireland's Ryanair as it can still make a profit during a downturn as travelers switch to more affordable flights.

Cities in the Mediterranean region, where room rates tend to be less expensive, are attracting travellers.

Greece and Spain remain popular travel destinations, while Turkey's Istanbul has made it into the top 5 most chosen travel destinations on the Trivago platform.

Online travel agency eDreams (Spain), which offers flights, vacation packages and car rentals, saw its average revenue per user drop by 4 euros to 80 euros in the quarter.  This is because many people subscribe to the Prime plan which offers deep discounts.

Travellers make shorter trips to destinations closer to home and book closer to departure date than before.  However, bookings in October and the first week of November on the eDreams platform increased by 45% compared to 2019 levels.

Airlines and travel agencies in Europe are seeing demand remain steady after a bumper summer thanks to pent-up demand unleashed after a two-year hiatus due to the pandemic, with many people spending heavily on vacations, trips to meet friends and visit relatives.

While escalating inflation and rising living bills are a challenge, airlines say that demand remains strong.  This month, Virgin Atlantic Airways (UK) said that in the post-Covid-19 era, people are more likely to spend money on a vacation than buying a new refrigerator. 

In the US, many people are also trying to limit their travel spending during the upcoming Thanksgiving and Christmas season, partly because airfares are so expensive.

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After two years of being interrupted by the pandemic, this holiday season is expected to be the time when families can reunite again.  However, with inflation pushing up the prices of everything from airline tickets to gas and food, many Americans have abandoned these gatherings because of the cost, not Covid-19.

In September, the average airfare for domestic routes in the US stood at US$307, up 36% over the same period last year and 41% compared to 2020.

According to a recent survey from Bankrate, nearly 80% of Americans traveling for the holidays this year have changed plans due to inflation.  The survey found that the most popular ways to cut costs are to travel fewer days, participate in cheaper leisure activities and choose less expensive travel destinations and accommodation.

Americans and Europeans cut Travel budgets during price storm

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