How the war in Ukraine will affect European tourism

The EUI says that European tourism was expected return to pre-pandemic levels in 2023, but the Russia- Ukraine conflict has compelled it to downgrade that forecast.

The war will affect Europe’s tourism industry in four ways: a loss of Russian and Ukrainian tourists; restrictions on airlines and use of airspace; higher food and fuel costs; and a big hit to traveller confidence and disposable incomes.

Turkey and Poland will suffer the biggest fall in visitors in absolute terms, but destinations such as Cyprus and Latvia were even more reliant on Russian tourists, who are traditionally high spenders.

The EUI says that the war in Ukraine, although primarily a humanitarian disaster, has set back hopes for a tourism recovery in Europe this summer. Not only will Russian tourists be unwelcome in many destinations, they will also struggle to get there, given bans on Russian airlines and restrictions on use of airspace.

Meanwhile, millions of Ukrainians are being forced abroad by the invasion, but as refugees rather than tourists. Across Europe, the war has pushed up already high commodity prices, particularly for food and energy, raising costs for debt-laden airlines, hotels and restaurants. High prices will also restrict consumers’ disposable income, making holidays less affordable even if consumer confidence returns.

The loss of Russian and Ukrainian tourists will be felt widely

Before the pandemic disrupted global tourism flows, Russia was the world’s 11th-biggest source of tourists, and Ukraine the 13th. Based on data from the World Tourism Organisation, we estimate that the two countries accounted for 75m tourist departures, or 5% of the global total, in 2019.

When it comes to tourism expenditure, Russians’ and Ukrainians’ contributions were even more important, making up a combined US$50bn (about 8% of the world total) in 2019; Russia alone was the world’s seventh-biggest spender.

Now, however, most Russian and Ukrainian tourists will disappear from Europe as war and sanctions hit travel routes and the two countries’ economies. In absolute terms, Turkey was the most popular destination for both nations in 2018, attracting 6m Russian and 1.4m Ukrainian tourists, which amounted to 16% of Turkey’s total tourist arrivals that year.

Several million Russians head to Asian countries, such as Thailand and China, and neighbouring nations like Kazakhstan, which may still be open to them. However, Poland and Italy, two other popular destinations, will now be barred to Russians.

Some smaller tourism destinations, with closer ties to Russia or Ukraine, will be hit even harder. In 2019 Russians accounted for 20%, 29% and 36% of all tourists visiting Cyprus, Montenegro and Latvia respectively. Meanwhile, the loss of tourist spending will be felt acutely in destinations that attract the

How the war in Ukraine will affect tourism

Infographic - Economist Intelligence Unit

The wealthiest Russian and Ukrainian visitors, who would typically spend heavily on hotels, restaurants and luxury retail. These include cities such as Milan, London and Paris, as well as popular spa towns like Karlovy Vary in the Czech Republic or Baden Baden in Germany. A loss of confidence since the invasion may also affect bookings by other travellers, although the full impact will not become clear until after the Easter period. Travel operators are reporting that European bookings from the US are stalling, after surging in early 2022 despite covid-related travel restrictions.

OAG, an airline data provider, reports that several scheduled flights to countries such as Finland and Sweden, as well as to much of eastern Europe, have been pulled owing to their geographical proximity to the war.

Meanwhile Russia itself will miss out on international tourist arrivals, which used to amount to 25m a year, most of which were from Ukraine. Ukraine, in turn, will lose about 14m tourists a year, many of them from Russia. Most of the well-trodden travel routes between the two countries are now blocked by tanks and missiles, and are unlikely to reopen any time soon. Most other travellers will also steer well clear.

Airlines are pulling flights from their schedules

The war and resulting sanctions will directly affect the airline industry, which had been slowly returning to normality after a disastrous pandemic. As part of the sanctions, Russian planes are now banned from EU, UK and US airspace, and planes flying over from the west are banned from Russian airspace and are avoiding Ukraine for fear of missile strikes.

Infographic - Economist Intelligence Unit

Many of the most direct international routes from east to west are now impossible, forcing airlines to fly further north or south. In addition, Russia has seized foreign planes that are still on its territory, and its flag carrier, Aeroflot, has halted most of its international flights. Judging by its 2021 results, Aeroflot alone will now lose an average of about 1m passengers, or US$550m in seat revenue, per month. Russia will also lose the heavy fees—some of the highest in the world– that it charged foreign airlines for their use of Russian airspace.

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Other airlines will suffer too; as at April 4th OAG reckoned that about 28m seats had been removed from flight schedules for the next three months – a drop of 2% year on year. However, although some of those cuts were in response to the sanctions, the main reason was the persistent covid travel restrictions in Asia. The pandemic remains a far bigger issue for the global airline industry than the war in Ukraine.

High commodity prices will weigh on tourism

Another issue facing airlines is the cost of fuel, which has been pushed even higher by the sanctions against Russia. Fuel accounts for 20-30% of airline costs, and jet fuel prices are now more than 80% higher than a year ago, according to the International Air Transport Association (IATA).

Insurance costs have risen sharply, too. These additional costs will be a heavy burden given airlines’ fragile finances. Even before the war, IATA expected its 290 member airlines to suffer a combined net loss of US$11.6bn in 2022, after losing about US$190bn in 2020-21.

Food prices are also heading higher

This will have a direct impact on hotels and restaurants, which will have to pass costs on to customers. Moreover, consumers themselves are struggling with the rise in commodity prices and overall inflation, with wages failing to keep pace. People are keen to eat out and travel again, after two years of restrictions, but price rises will inevitably dent demand for outings and holidays.

Even so, with price rises buoying spending in nominal terms, we still expect Europe’s consumer spending on hotels and restaurants to rise by 8% to US$912bn, close to pre-pandemic levels. The same is not true in Russia, where Western restaurant chains such as McDonald’s (US) have ceased operations.

The EIU expects spending at hotels and restaurants to decline even in rouble terms this year, and to plummet in US dollar terms. This is just part of the heavy economic price that Russia – and, to a lesser extent, the rest of Europe – will pay as the war ra ges on.

What impact does the war in Ukraine have on European tourism?

Dana is a Travel Tomorrow reporter. She graduated in Political Science and International Relations. She moved to Brussels from Romania for her studies and Mont des Arts made her fall in love with the city and remain here. She loves animals, especially dogs, and everything food related, but dessert most of all.

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As European tourism has started its path towards recovery following the devastating impact of the Covid-19 pandemic, the sector is now facing a major crisis with Russia’s invasion of Ukraine. The conflict might cause another setback in the recovery of European tourism, particularly in Eastern European destinations.

This conflict has already triggered a sharp spike in energy prices, which will directly affect the costs of transportation and tourism services while also posing risks to wider consumer demand in Europe. The war also threatens Europe’s international image as a safe destination in long-haul markets, as well as causing disruptions in air connectivity.

To address this pressing matter, the European Transport Commission (ETC) held a webinar, Impact of the Ukraine war on European tourism, encompassing a discussion between various experts in the field of travel and tourism.

Travel is a force for peace, understanding and respect.

Luís Araújo, ETC President

1. Solidarity with Ukraine

Starting off the webinar, ETC President Luís Araújo reiterated the ETC stand on Russia’s invasion of Ukraine. “First of all, I have to say that we firmly stand in solidarity with Ukraine. We’ve been deeply shocked by the military invasion of Ukraine by the Russian government. And we have been stating that, by all possible means, we condemn this attack on freedom in Europe. And we call, of course, for the immediate restoration of peace. Our thoughts are with the Ukrainian people and our travel and tourism colleagues in Ukraine, whose livelihoods have been destroyed.”

2. Hopeful forecasts

Despite everything, the forecasts are not as dim as one might think. DG GROW Director Valentina Superti highlighted the fact that “it’s always good to look at the figures, not because they are figures, but because they mean something”, reason for which the European Commission is launching a survey to more clearly determine the impact of the war on the travel and tourism industry.

Nevertheless, Superti is hopeful about the future, since, before the conflict in Ukraine, the tourism ecosystem was already showing “very good signs of recovery and notably with very good winter results”.

The same optimistic forecast is shared by the Tourism Economics Managing Director, David Goodger, who explained that, all in all, taking into account the invasion itself deterring people from travelling to Europe, but also the higher cost of travelling imposed by inflation and the soaring energy prices, the full recovery of the travel and tourism industry has only been pushed back one year.

Explaining why the industry is less affected by the war than the Covid-19 pandemic, Olivier Henry-Biabaud, founder of TCI Research, referred to the difference between the two “enemies”. While two years ago “the enemy was kind of unknown and very invisible and deciding to travel was kind of running the dice and you had a very good chance to be exposed to the virus and contaminated”, Russia’s invasion of Ukraine has a much more tangible effect, “the enemy has a face”, and people know almost certainly where it is safe to travel and where it is not. “This is impacting quite sharply, but not at the magnitude that we could expect compared to some other crises”, he added.

If I decide to go tomorrow to Bratislava, the chance for me to be killed by the Russian army is just like close to 0%.

Olivier Henry-Biabaud, founder of TCI Research

3. The economics of the travel and tourism industry

Tourism represents 10% of European GDP and provides 23 million direct and indirect jobs. Mrs. Superti admitted there is clearly already a direct impact caused simply by the loss of Russia as an important market for tourism destinations, as well as the territories surrounding the conflict. The European Commission however expects regions that are further away from the war zone to be relatively less affected, but everybody will suffer the indirect effect, like energy prices

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Mr. Goodger stressed the fact that inflation and higher energy prices will also impact the tourism industry, as they lead to an increase in overall travel expenses, but the “silver lining” is that CPI is expected to reach a peak this year.

To soften the economic impact on the industry, Mrs. Superti said the European Commission is working on a “rightly so generous” framework to support the travel and tourism operators affected by this crisis. Furthermore, she said they will continue their collaboration with the ETC to promote Europe as a safe destination and, lastly, they are working on a transition roadmap for tourism to achieve a more resilient ecosystem.

4. Travel sentiment and destination reputation

One of the factors affecting the travel and tourism industry is, of course, what people think about a certain destination. Whether they believe a place is safe or not or if their experience will be affected.

Talking about travel sentiment and destination reputation, Mr. Biabaud explained TCI Research aggregates data from the media, companies and consumers, social conversation being the driving factor for a certain destination’s reputation. And if a destination’s reputation is better than its neighbours’, it has a higher chance of being chosen by travellers.

Keeping this in mind, only one third of the conversations on travelling to Europe are about the Ukraine crisis, which is not such a profound impact, at least compared to the pandemic, at the beginning of which between 50% and 70% of the conversations were about Covid-19.

After 2 years of uncertainty, this is the first year that people are showing a very strong desire to travel. In North America, travellers are not cancelling their plans, but postponing or just adapting their itinerary within Europe. Furthermore, the big markets like France, Italy and Spain remain largely unaffected in terms of reputation.

We hear a bit of anti-Russia or Russian hate developing, just like, we had a bit of anti-China resentment when the Covid crisis started two years ago.

Olivier Henry-Biabaud, founder of TCI Research

The most affected market however will be Russia. Besides the obvious reasons related to how the conflict develops and when it ends, even after the conclusion of the invasion, the stigma will stick. The fallback will be felt for a longer period of time by Russia than other destinations in Europe, nevertheless “the Russian market will come back, maybe in 6 months…but probably in 6 years”.

5. Aviation

When it comes to the impact on the aviation industry, Olivier Ponti, Vice President Insights of ForwardKeys, also presented a promising view. The intra-European level of travelling was, right before the invasion, at 80% of the pre-Covid level and only dropped to 65-70%, while the trans-Atlantic bookings dropped from 86% to 74% the week the conflict started but returned quite quickly to pre-war levels.

Furthermore, airlines have not adapted their capacity in reaction to the war, continuing their return to pre-pandemic levels.

We should also expect specific travel businesses, like travel retail or duty-free operators to suffer from the lack of high-end shoppers coming from Russia.

Olivier Ponti, Vice President Insights of ForwardKeys

He also stressed the fact that some European destinations will not be affected the most by the lack of tourists who fear visiting the continent because of the war, but by the lack of Russian tourists, who can no longer go on holiday, the most affected being cities on the Mediterranean and the Black Sea.

How the war in Ukraine will affect European tourism

The EUI says that European tourism was expected return to pre-pandemic levels in 2023, but the Russia- Ukraine conflict has compelled it to downgrade that forecast.

The war will affect Europe’s tourism industry in four ways: a loss of Russian and Ukrainian tourists; restrictions on airlines and use of airspace; higher food and fuel costs; and a big hit to traveller confidence and disposable incomes.

Turkey and Poland will suffer the biggest fall in visitors in absolute terms, but destinations such as Cyprus and Latvia were even more reliant on Russian tourists, who are traditionally high spenders.

The EUI says that the war in Ukraine, although primarily a humanitarian disaster, has set back hopes for a tourism recovery in Europe this summer. Not only will Russian tourists be unwelcome in many destinations, they will also struggle to get there, given bans on Russian airlines and restrictions on use of airspace.

Meanwhile, millions of Ukrainians are being forced abroad by the invasion, but as refugees rather than tourists. Across Europe, the war has pushed up already high commodity prices, particularly for food and energy, raising costs for debt-laden airlines, hotels and restaurants. High prices will also restrict consumers’ disposable income, making holidays less affordable even if consumer confidence returns.

The loss of Russian and Ukrainian tourists will be felt widely

Before the pandemic disrupted global tourism flows, Russia was the world’s 11th-biggest source of tourists, and Ukraine the 13th. Based on data from the World Tourism Organisation, we estimate that the two countries accounted for 75m tourist departures, or 5% of the global total, in 2019.

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When it comes to tourism expenditure, Russians’ and Ukrainians’ contributions were even more important, making up a combined US$50bn (about 8% of the world total) in 2019; Russia alone was the world’s seventh-biggest spender.

Now, however, most Russian and Ukrainian tourists will disappear from Europe as war and sanctions hit travel routes and the two countries’ economies. In absolute terms, Turkey was the most popular destination for both nations in 2018, attracting 6m Russian and 1.4m Ukrainian tourists, which amounted to 16% of Turkey’s total tourist arrivals that year.

Several million Russians head to Asian countries, such as Thailand and China, and neighbouring nations like Kazakhstan, which may still be open to them. However, Poland and Italy, two other popular destinations, will now be barred to Russians.

Some smaller tourism destinations, with closer ties to Russia or Ukraine, will be hit even harder. In 2019 Russians accounted for 20%, 29% and 36% of all tourists visiting Cyprus, Montenegro and Latvia respectively. Meanwhile, the loss of tourist spending will be felt acutely in destinations that attract the

How the war in Ukraine will affect tourism

Infographic - Economist Intelligence Unit

The wealthiest Russian and Ukrainian visitors, who would typically spend heavily on hotels, restaurants and luxury retail. These include cities such as Milan, London and Paris, as well as popular spa towns like Karlovy Vary in the Czech Republic or Baden Baden in Germany. A loss of confidence since the invasion may also affect bookings by other travellers, although the full impact will not become clear until after the Easter period. Travel operators are reporting that European bookings from the US are stalling, after surging in early 2022 despite covid-related travel restrictions.

OAG, an airline data provider, reports that several scheduled flights to countries such as Finland and Sweden, as well as to much of eastern Europe, have been pulled owing to their geographical proximity to the war.

Meanwhile Russia itself will miss out on international tourist arrivals, which used to amount to 25m a year, most of which were from Ukraine. Ukraine, in turn, will lose about 14m tourists a year, many of them from Russia. Most of the well-trodden travel routes between the two countries are now blocked by tanks and missiles, and are unlikely to reopen any time soon. Most other travellers will also steer well clear.

Airlines are pulling flights from their schedules

The war and resulting sanctions will directly affect the airline industry, which had been slowly returning to normality after a disastrous pandemic. As part of the sanctions, Russian planes are now banned from EU, UK and US airspace, and planes flying over from the west are banned from Russian airspace and are avoiding Ukraine for fear of missile strikes.

Infographic - Economist Intelligence Unit

Many of the most direct international routes from east to west are now impossible, forcing airlines to fly further north or south. In addition, Russia has seized foreign planes that are still on its territory, and its flag carrier, Aeroflot, has halted most of its international flights. Judging by its 2021 results, Aeroflot alone will now lose an average of about 1m passengers, or US$550m in seat revenue, per month. Russia will also lose the heavy fees—some of the highest in the world– that it charged foreign airlines for their use of Russian airspace.

Other airlines will suffer too; as at April 4th OAG reckoned that about 28m seats had been removed from flight schedules for the next three months – a drop of 2% year on year. However, although some of those cuts were in response to the sanctions, the main reason was the persistent covid travel restrictions in Asia. The pandemic remains a far bigger issue for the global airline industry than the war in Ukraine.

High commodity prices will weigh on tourism

Another issue facing airlines is the cost of fuel, which has been pushed even higher by the sanctions against Russia. Fuel accounts for 20-30% of airline costs, and jet fuel prices are now more than 80% higher than a year ago, according to the International Air Transport Association (IATA).

Insurance costs have risen sharply, too. These additional costs will be a heavy burden given airlines’ fragile finances. Even before the war, IATA expected its 290 member airlines to suffer a combined net loss of US$11.6bn in 2022, after losing about US$190bn in 2020-21.

Food prices are also heading higher

This will have a direct impact on hotels and restaurants, which will have to pass costs on to customers. Moreover, consumers themselves are struggling with the rise in commodity prices and overall inflation, with wages failing to keep pace. People are keen to eat out and travel again, after two years of restrictions, but price rises will inevitably dent demand for outings and holidays.

Even so, with price rises buoying spending in nominal terms, we still expect Europe’s consumer spending on hotels and restaurants to rise by 8% to US$912bn, close to pre-pandemic levels. The same is not true in Russia, where Western restaurant chains such as McDonald’s (US) have ceased operations.

The EIU expects spending at hotels and restaurants to decline even in rouble terms this year, and to plummet in US dollar terms. This is just part of the heavy economic price that Russia – and, to a lesser extent, the rest of Europe – will pay as the war ra ges on.

Source https://globetrender.com/2022/04/28/how-the-war-in-ukraine-will-affect-european-tourism/

Source https://traveltomorrow.com/what-impact-does-the-war-in-ukraine-have-on-european-tourism/

Source https://globetrender.com/2022/04/28/how-the-war-in-ukraine-will-affect-european-tourism/#:~:text=The%20war%20will%20affect%20Europe%E2%80%99s%20tourism%20industry%20in,big%20hit%20to%20traveller%20confidence%20and%20disposable%20incomes.

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