Macro commentary by eToro analyst for Romania, Bogdan Maioreanu
Just returned from the National Day of Romania holiday, many Romanians are planning their Christmas vacation. And they are not alone. One third of Europeans are planning to travel this Holiday Season. But the inflation, with energy prices affecting people’s budgets, is changing their travel plans and is adding concerns about how expensive this vacation will be.
According to the latest European Travel Commision survey, the most preferred countries for Europeans’ next trip are France, Spain, Italy, Germany and Greece. The top three countries for a leisure trip are France, Italy and Spain while Austria, Germany and Spain again are the top three countries for a business trip.
Unfortunately Romania is not a preferred destination having less than 1% of travel intentions. For Romania, the year to date performance in Tourism, compared with 2019 was showing a 45% decrease in International Arrivals and a 39% decrease in booked nights according to the European Travel Commision latest Quarterly Report.
This quarter and the next, almost 29% of Europeans plan to travel within their country and almost 8% outside Europe, 3% less in each category compared with 2021. Among those who are traveling, about 62% are planning to visit another European country, a 12% increase compared with last year.
Inflation is influencing Europeans travel plans too, one quarter being concerned about the rise in overall costs and 17% being concerned by the situation of personal finances. Despite this, the data are showing that bookings for the Summer were only 3% below the pre-pandemic levels and this tendency continued in October. But the estimates for the winter season 2022/23 shows at this stage of booking entry a cumulative decline in sales of 27 percent. Vacations are more expensive too. The travelers’ concerns about price rises are right, for example in the Swiss alps resorts are increasing their prices by 9% for adults this winter to cope with high energy costs. The trend is similar in Italy and Austria, popular destinations for winter sports.
Two thirds of the Europeans plan to stay up to six nights while traveling, and 500 to 1000 Euro per person is the most common travel budget. City breaks are preferred by 20% of Europeans, 15% are searching for culture and heritage, 14% are looking forward to nature and outdoor experiences and 13.5% to sea and sun in the fall-winter season.
For the Europeans, the criteria for choosing their destination are in order: pleasant weather conditions, bargain and attractive deals, a destination not to be crowded and to have friendly and welcoming locals. The Covid-19 pandemic left marks, other criteria being direct transport routes with fully lifted travel restrictions but the place must have health and safety protocols and effectiveness in managing Covid-19.
Looking to the future, according to WTTC (World Travel and Tourism Council) in the next 12 months 63% of the people surveyed in 25 countries plan to take a leisure trip with 27% planning three or more trips. But according to Global Data the recovery to pre pandemic levels will take time, estimating that by 2025, international departures are projected to be 98% of 2019 levels. The global airlines companies are expected to reach pre pandemic levels with a different pace according to IATA. North America is forecasted for 2023, Europe for 2024 and Africa and Asia Pacific region for 2025.
Almost two thirds of those surveyed in the above WTTC survey (61%) stated they prefer travel brands and destinations that are more sustainable, whilst almost half (45%) said they will only spend their money with brands that are socially and environmentally responsible. While the ESG trend is gaining importance among consumers, investors are paying attention too. According to the eToro Retail Investor Beat survey, 35% of investors are always considering ESG while 38% others are sometimes looking at ESG when deciding on an investment.
Bogdan Maioreanu, eToro analyst and markets commentator, has over 20 years of experience in financial services and investments and a strong background in journalism. He held different Corporate Banking management positions in both Raiffeisen Bank and OTP Bank, before moving to business consultancy roles working for IBM Romania among others. Bogdan is an Executive MBA from Asebuss and Washington University.
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