The Travel Quarterly Statement for Q2 2022 shows a mixed picture for global travel and tourism. On the one hand, there is immense consumer demand as more travel restrictions ease, so much so that supply cannot match it due to challenges such as labour shortages. Rising prices are a major headwind to the speed and scale of the recovery, but for now 2022 is shaping up to be a stellar year, led by North America, Europe and the Caribbean.
The moment has arrived when the travel and tourism sector can finally return to some form of normalcy post-pandemic, as enormous pent-up demand is unleashed in line with the increased easing of travel restrictions, with regions like Europe mainly without any COVID-19 restrictions. Based on the latest quarterly statement, global inbound tourism spending is set to grow by an astronomical 84% in 2022; however, the road to recovery will be long and hard, with 2019 levels not attained until at least 2029.
The economic backdrop remains very challenging, with the global inflation surge a major headwind, exacerbated by the ongoing war in Ukraine, which has led to energy and food supply chain disruptions, and contributed to escalating prices. Travel brands are between a rock and hard place, as they can only take a hit to their profit margins for so long by absorbing rising costs, whilst they risk pricing consumers out of the market if they pass on some or all of the increased costs to final customers.
Although it is positive to see demand returning with a bang, not withstanding over-tourism concerns, there are huge operational challenges on the supply side, as seen in countries like the UK. There the sector has been ill-equipped to match strong demand at peak times due to labour shortages, compounded by industrial action in response to the cost of living crisis, leading to thousands of flight cancellations and long delays.
In the northern hemisphere, countries in Southern Europe, Mexico and the Caribbean are gearing up for a busy summer, led by strong outbound demand from the US and Europe. The priority will mostly be intraregional travel, as long haul destinations like Asia Pacific remain behind the curve in terms of the easing of restrictions although they are slowly catching up. There are more positive signs coming from China, as the Shanghai lockdown has ended and pre-departure testing and requirements, and length of quarantine are beginning to ease.
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