GlobalData, a leading data and analytics company, discovered that as national inflation rates across Europe have dramatically increased over the past few months, many European travelers have been able to satisfy their desire to vacation abroad by purchasing cheaper tourism-related products and services. This has allowed them to ensure they can make ends meet back at home while also satisfying their desire to vacation abroad.
According to Ralph Hollister, an analyst at GlobalData specializing in travel and tourism, “this amount of inflation would be anticipated to substantially reduce demand for overseas travel.” However, reports of overcrowded airports in many European countries continue to surface, indicating that the pandemic-induced desire for foreign travel is still persistent despite the fact that inflation has caused levels of disposable income to decrease.
In recent months, the rate of inflation in the UK has showed sharp rises that are comparable to those seen in the Eurozone. Despite this, demand for international travel remains across all socioeconomic strata. According to the study conducted by GlobalData, which can be seen below, 20.8% of respondents still want to travel worldwide this summer, and this number holds true even within the socioeconomic band DE, which is considered to have a lower level of income. The prices paid by consumers who fall into this category are likely to be impacted the most by inflation.
According to Hollister, “a considerable number of European travelers in less wealthy socioeconomic bands will still be able to travel by trading down in terms of the travel-related items and services they acquire in the “before” and “during” phases of a trip.” [Citation needed] This will unquestionably work to the advantage of businesses who currently cater to those traveling on a tight budget.
For instance, vacationers who often stay in hotels in a more moderate price range may now choose more affordable types of lodging so that they may spend less money on their primary summer vacation. This might work to the advantage of suppliers of services at lower prices, like Airbnb. Because the hosts are most likely experiencing the impacts of inflation themselves, they may choose to cut their pricing in order to attract the greatest number of customers during peak season and maintain their position in the market.
Carpooling is only one example of a growing trend that might benefit from this. During the last few years, ride-sharing applications such as BlaBlaCar have seen a significant increase in the number of people that utilize their services. These applications put up passengers on a budget with drivers who are doing medium- to long-distance trips and have extra seats available in their automobiles. During the summer, vacationers who are searching for less expensive modes of transportation may utilize an application of this kind.
There is little question that the ripple effects of inflation throughout Europe will make it take travel and tourism businesses longer to get back on their feet. However, the strong desire of travelers to continue going even as a time of economic collapse looms will be made easier by trading down, with cheaper items and services being emphasized in order to mitigate the effect of inflation.”
The pie chart illustrates the proportion of customers from each socioeconomic class who are planning a vacation in the United Kingdom (UK), outside of the UK, or do not have any vacations scheduled for this summer. The percentages for each socioeconomic grade do not add up to one hundred since respondents had the option of choosing between a vacation in the United Kingdom or a holiday in another country.
The information was gathered from a monthly poll conducted by GlobalData in 2022, which included 2,000 participants. AB: Occupations at higher and intermediate levels of management, administrative work, and professional work. The C1 classification denotes jobs in the areas of supervision, clerical work, and junior management, administrative, and professional positions. Occupational categories requiring significant manual dexterity DE refers to manual, semi-skilled, and unskilled labor jobs, along with unemployment and jobs with the lowest grade.