# Europe sees travel recovery as COVID restrictions ease
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-05-06
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: European airlines and hotel chains see bookings surge post
Meta Description: Discover how European airlines and hotel chains are rebounding post-COVID with a surge in bookings for short trips and a forecasted return to profitability.
URL: https://financedigest.com/europe-sees-travel-recovery-as-covid-restrictions-easehtml

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By Paul Sandle and Tim Hepher

LONDON/DUBLIN (Reuters) – European airlines and hotel chains are seeing bookings recover to levels not seen since before the COVID-19 pandemic, led by demand for shorter trips, although travellers remain cautious about making long-distance journeys.

The pandemic led to international travel virtually shutting down as governments around the world banned foreigners from entering their countries. However, the easing of [restrictions and a pent-up demand to travel](https://www.financedigest.com/eu-to-restrict-travel-rules-for-russians-split-on-how-far-to-go.html "EU to restrict travel rules for Russians, split on how far to go") has sparked cautious optimism among executives.

Challenges remain in the form of [rising costs](https://www.financedigest.com/can-cfos-balance-the-books-with-rising-operating-costs.html "Can CFOs balance the books with rising operating costs?") and staff shortages causing flights to be cancelled. Despite that, airlines are forecasting a [return to profitability](https://www.financedigest.com/uks-j-d-wetherspoon-returns-to-profit-as-supply-issues-ease.html "UK’s J D Wetherspoon returns to profit as supply issues ease").

There is a lot of [pent-up demand](https://www.financedigest.com/pent-up-demand-prompts-european-travel-recovery-as-covid-curbs-ease.html "Pent-up demand prompts European travel recovery as COVID curbs ease"). People want to [see their families and travel](https://www.financedigest.com/european-airlines-see-travel-withstanding-consumer-squeeze-for-now.html "European airlines see travel withstanding consumer squeeze for now") again,” said Phil Seymour, president of IBA Group, a UK-based consultancy and aircraft valuation firm.

British Airways-owner IAG expects to be [profitable from the second quarter onwards and for the year](https://www.financedigest.com/crop-merchant-louis-dreyfus-gets-profit-boost-in-volatile-year.html "Crop merchant Louis Dreyfus gets profit boost in volatile year") as a whole, it said on Friday. That’s despite having to cut capacity in the first quarter to avoid disruptions.

Premium leisure continues to be the strongest performing segment and [business travel](https://www.financedigest.com/5-business-ideas-influencing-the-travel-industry.html "5 business ideas influencing the travel industry") is at its highest level since the start of the pandemic,” said IAG Chief Executive Luis Gallego.

IAG, which also owns Iberia, Vueling and Aer Lingus, said the easing of government-imposed [travel restrictions](https://www.financedigest.com/cathay-pacific-lowers-q4-capacity-forecast-as-travel-restrictions-linger.html "Cathay Pacific lowers Q4 capacity forecast as travel restrictions linger"), particularly in the UK, had improved demand. It [reported “no noticeable](https://www.financedigest.com/euronext-delays-commitment-of-traders-report-until-further-notice.html "Euronext delays commitment of traders report until further notice") impact” from Russia’s invasion of Ukraine.

IAG forecasts [passenger capacity to be around 80% of 2019 levels](https://www.financedigest.com/fraport-sees-2023-passenger-traffic-at-80-90-of-pre-pandemic-levels.html "Fraport sees 2023 passenger traffic at 80-90% of pre-pandemic levels") in the second quarter, rising to 90% by the fourth quarter. Flights between Europe and North America will be close to full capacity by the [third quarter](https://www.financedigest.com/greek-residential-property-price-recovery-picks-up-in-third-quarter.html "Greek residential property price recovery picks up in third quarter"), it said.

We are [finally seeing](https://www.financedigest.com/10-year-david-goliath-crusade-finally-sees-justice-for-off-plan-spanish-property-buyers.html "10 year ‘David & Goliath’ crusade finally sees justice for off-plan Spanish property buyers") genuine shoots of progress, with profits expected to sprout from next quarter,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

IAG’s [bullish outlook](https://www.financedigest.com/dollar-firms-in-soft-holiday-trading-outlook-bullish.html "Dollar firms in soft holiday trading, outlook bullish") followed similar guidance from other European airlines.

Germany’s Lufthansa is looking to return to an operating profit this quarter as demand for travel [rises with the easing](https://www.financedigest.com/bank-shares-rise-after-credit-suisse-rescue-eases-crisis.html "Bank shares rise after Credit Suisse rescue eases crisis") of COVID-19 curbs, it said on Thursday.

Air France-KLM has seen a recovery in ticket [sales and strong](https://www.financedigest.com/indias-tata-motors-jumps-to-a-7-month-high-on-strong-q4-jlr-sales.html "India’s Tata Motors jumps to a 7-month high on strong Q4 JLR sales") summer bookings, it said on Thursday.

Short-haul bookings are driving the recovery. Travellers are still wary on long-distance journeys as [COVID-19 concerns](https://www.financedigest.com/oil-prices-rise-as-weaker-dollar-offsets-china-covid-19-concerns.html "Oil prices rise as weaker dollar offsets China COVID-19 concerns") linger and U.S. visitors remain cautious about planning trips to Europe because of the [conflict in Ukraine](https://www.financedigest.com/gorbachev-died-shocked-and-bewildered-by-ukraine-conflict-interpreter.html "Gorbachev died shocked and bewildered by Ukraine conflict – interpreter").

Hotel operators are also [seeing demand](https://www.financedigest.com/inpost-sees-stronger-2022-but-warns-of-slowing-demand.html "InPost sees stronger 2022 but warns of slowing demand") pick up.

Holiday Inn owner IHG said on [Friday that pent-up demand and more hotel stays](https://www.financedigest.com/staying-ahead-of-risk-this-black-friday.html "Staying Ahead of Risk This Black Friday") during the U.S. Spring Break [lifted occupancy rates](https://www.financedigest.com/shares-steady-dollar-dips-as-us-holiday-lifts-rates-gloom.html "Shares steady, dollar dips as US holiday lifts rates gloom") and prices, raising its revenue per room closer to pre-pandemic levels in the first quarter.

Our hotels are seeing [increased pricing](https://www.financedigest.com/taylor-wimpey-espana-remain-cautiously-optimistic-as-average-selling-price-increases-by-20-4.html "Taylor Wimpey España ‘remain cautiously optimistic’ as average selling price increases by 20.4%") power,” said IHG Chief Executive Keith Barr.

U.S. rival Marriott International said on Wednesday it expects a [key revenue](https://www.financedigest.com/digital-sales-transformation-is-key-to-faster-higher-revenue.html "Digital sales transformation is key to faster, higher revenue") metric for its U.S. and Canadian markets to hit [pre-pandemic levels for the rest of the year](https://www.financedigest.com/heathrow-airport-says-return-to-pre-pandemic-demand-years-away.html "Heathrow Airport says return to pre-pandemic demand years away").

Another illustration of [rising demand](https://www.financedigest.com/euro-zone-likely-entering-recession-as-price-rises-hit-demand-pmi.html "Euro zone likely entering recession as price rises hit demand -PMI") came on Friday from Amadeus, the Spanish firm which operates the world’s largest travel booking system. It processed almost 92 [million bookings during the first quarter](https://www.financedigest.com/warner-bros-discovery-adds-2-million-subscribers-in-first-quarter.html "Warner Bros Discovery adds 2 million subscribers in first quarter"), a little more than half the pre-pandemic levels. That was despite the spread of the [COVID-19 Omicron variant](https://www.financedigest.com/oil-prices-keep-climbing-even-as-omicron-covid-19-variant-fans-out.html "Oil prices keep climbing even as Omicron COVID-19 variant fans out") hitting bookings in January.

Higher inflation and the Russia-Ukraine conflict will defer the travel recovery rather than derail it, said David Goodger, managing director of [Europe and the Middle East at consultancy Tourism Economics](https://www.financedigest.com/infosecurity-europe-agenda-spotlights-innovation-as-security-leaders-address-cybersecurity-spend-in-the-face-of-economic-headwinds.html "Infosecurity Europe agenda spotlights innovation as security leaders address cybersecurity spend in the face of economic headwinds"), an Oxford Economics company.

We expect to see domestic travel volumes in 2022 [surpass 2019 levels](https://www.financedigest.com/foreign-tourism-to-portugal-surpasses-pre-covid-levels-in-july.html "Foreign tourism to Portugal surpasses pre-COVID levels in July") while international travel will see a large rebound back towards that level,” he said.

The growing [cost of living](https://www.financedigest.com/five-cost-of-living-trends-expected-in-2023.html "Five cost of living trends expected in 2023") crisis will temper some of the travel that dominated a liberalised aviation market in recent decades as Europeans’ lifestyles spilled across borders.

“I do wonder about some of ‘city break’ type of travel,” Seymour of IBA said on the sidelines of the Airfinance Journal conference in Dublin. Such discretionary [travel tends to be stimulated by direct links from budget](https://www.financedigest.com/how-to-travel-europe-on-a-budget.html "How to travel Europe on a budget") carriers.

“I call it the Michael Buble syndrome. People used to fly to Italy for the weekend just to hear a concert. Now they might [save a trip and wait for the tour to arrive closer to home.”](https://www.financedigest.com/greek-villagers-try-to-save-homes-as-wildfires-burn-for-eighth-day.html "Greek villagers try to save homes as wildfires burn for eighth day")

(Reporting by Paul Sandle in London and Shanima A in Bengaluru; Additional reporting by Shanima A in Bengaluru, Inti Landauro in Madrid, Sarah Morland in Paris and Zuzanna Szymanska in Frankfurt; Writing by Matt Scuffham; Editing by Susan Fenton)


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