US visitors wary of Ukraine threaten European travel recovery

Airlines and hoteliers have warned that the conflict in Ukraine is causing high-spending US travelers to hold off visiting Europe, slowing the industry’s long recovery from the pandemic.

Dermot Crowley, chief executive of the Irish hotel group Dalata, told the Financial Times that “concern” about the Russian invasion of Ukraine “may make North Americans nervous about coming to Europe”, while French hotel operator Accor said it expected bookings across all hotel groups in Europe to suffer.

A US airline official agreed, saying American tourists were likely to be put off visiting parts of the continent, particularly central or eastern Europe, citing the slowdown in US visitors traveling east during the first Gulf war.

Heathrow airport last week warned that “concerns from US travelers over war in Europe” was contributing to “huge uncertainty” about passenger numbers this year. Travel marketing company MMGY said 47 per cent of Americans planning trips to Europe had decided to “wait and see” how the situation in Ukraine unfolds.

Many industry executives say passengers from the US are particularly sensitive to travel near conflict zones, and the crisis in Ukraine has evoked memories of the 1990-1991 Gulf war when tourism from North America to Europe collapsed.

Flight booking data underline the travel executives’ fears. Bookings between the US and Europe fell 13 per cent week-on-week in the seven days following Vladimir Putin’s invasion of Ukraine on February 24, according to research firm ForwardKeys. Hopper, a travel app, also reported weakening demand for transatlantic flights.

In the week following the start of military action, bookings for all European countries except Belgium, Iceland and Serbia declined between 10 and 30 per cent, according to Forward Keys.

Bookings collapsed most for areas closest to the conflict such as Bulgaria, Poland and Hungary, where flight reservations fell by as much as 50 per cent in some states.

The transatlantic market is critical to European airlines including British Airways and Virgin Atlantic, and carriers had expected a rapid rebound to pre-pandemic passenger numbers by the summer.

If the crisis continues to hit travel demand, the industry will face a third year of turmoil since the start of the pandemic when it was among the first sectors to be affected by the closing of international borders in March 2020.

Many airlines and travel companies are loaded with debt and another blow to revenues will put extra strain on stretched balance sheets. Businesses, particularly luxury hotels, are already struggling with the lack of Asian arrivals into Europe thanks to the stringent Covid restrictions that remain in place in China and Japan.

After Russia, the US typically makes up the largest inbound passenger market for Europe, Tom Jenkins, chief executive of the European Tourism Association, said. There had been “real momentum for people in the States coming back to Europe for the first time in two years,” he added.

Industry data provider Tourism Economics had predicted in January that arrivals from the US into Europe would recover to 23.3mn, up 171 per cent compared with last year but still 56 per cent below 2019’s levels.

The research firm said that of the estimated $126bn spending by non-European travelers in Europe in 2019, roughly a quarter came from US visitors.

Glenn Fogel, chief executive of Amsterdam-based online travel giant, said room nights booked through the company had dropped 10 per cent compared with 2019 in the first week of March, having fully recovered to pre-pandemic levels in February. Both eastern and western Europe had been affected, he added.

Ryanair disclosed a 20 per cent fall in bookings in the day’s following Russia’s invasion, but the airline’s chief executive Michael O’Leary said it began recovering within days and that he expected only a temporary blip.

“We continue to monitor the unfolding crisis closely,” Fogel said.

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