2022 is the year when tourism restarted, confirms study

Two new research reports from analysts Oxford Economics suggest that 2022 is the year when tourism restarted in earnest, despite some headwinds.

Key points from one report, “Beyond the Forecast: Insights on the Travel & Tourism Industry” include:

  • The travel recovery is underway globally and 2022 is the year when tourism restarted in earnest despite some headwinds.
  • The global macroeconomic environment is a key factor underlying travel flows and providing risks (both upside and downside) to the outlook for tourism.
  • Inflationary pressures are the clearest risk factor for tourism affordability, but recovery will be fuelled in the short-term by pent-up and large accumulated savings.
  • Chinese outbound travel will be slowest to return as restrictions linger.
  • Domestic and short-haul travel will recover earliest, while cost factors will deter some longer-haul trips.
  • Destination performance will vary, in part, due to the mix of source markets attracted.

There are still factors at play that are a drag on the travel recovery and introduce risks to the outlook, but overall things have mostly restarted after the disruption of the pandemic. The pace of recovery will vary for different types of travel and domestic tourism, globally, is expected to recover 2019 volumes this year, and international travel in 2025.

Higher inflation is a headwind for the travel outlook. However, because there is a lot of pent-up demand from two years of minimal travel, the impact of higher airfares on travel decisions is smaller than would have been the case in previous inflationary periods. Individuals are so eager to travel; they are likely to accept higher prices provided they can afford it.

Within international travel, different distances will recover at different paces.

Short-haul travel between countries within the same sub-region, such as within Northeast Asia (e.g. from Japan to Korea) or Southeast Asia (Malaysia to Singapore) is expected to recover soonest in the near-term.

Medium-haul travel (between sub-regions, such as from Southeast Asia to Oceania) and long-haul travel (between different major regions, such as Asia and Europe) will recover much later, due to higher costs and greater uncertainty around transport options for these trips.

Tourism is expected to recover more quickly in the Asia-Pacific region than globally.

The impact and uncertainty of China remaining closed is significant given China’s key role as a source market for destinations. Globally, many destinations are heavily exposed to China.

The key findings from the second report from Oxford Economics, “European Tourism Trends 2022- trends and prospects Q2-2022 ” include:

  • Destinations across Europe continue to relax travel restrictions as concerns over Covid-19 wither away, enabling the release of strong (short- and mid-haul) pent-up demand. Skyrocketing energy prices are pushing travel costs yet higher, prompting people to travel closer to home or consider cost-saving options.
  • It remains to be seen how households (especially lower-income earners) will make a trade-off on travel spending amidst consumer price hikes and squeezed disposable incomes.
  • Worsening inflation, prolonged war disruption, the resurgence of the pandemic and economic turmoil continues to endanger the tourism outlook.
  • Latest available data indicates that European tourist arrivals are 43% below pre-pandemic levels between January and March this year, whereas prospects for the overall year 2022 suggest that the region would recover 70% of pre-pandemic travel demand.