Europe is undergoing the biggest refugee crisis since World War 2, with more than 4 million people now having fled Ukraine in the past 40 days. Coupled with rising inflation, there is little doubt that Europe is heading into a massive period of transformation, economically, culturally and politically.
In this context, people’s holidays and travel might seem irrelevant, but this is an interesting time in that most EU countries have, or are on the brink of reopening their doors to large swathes of tourists that are eager to spend money and see the world after two years of living through a pandemic.
The signs suggest, however, that people will have less money to spend on holidays and that holidays will become more expensive.
In the first instance, the increase in the cost of living means less money to spend on holidays. Axios reported that “the war is cooling what was supposed to be a hot economy this year.”
If the war knocks half a percentage point off global GDP, as is now expected by the Economist Intelligence Unit, then the repercussions will make things harder to find in shops and increase the cost of commodities. Everything risks becoming more expensive.
At the same time, rising energy costs mean households will need to pay more to heat their homes. In the U.K. for example, with inflation at its highest for over 30 years, as reported by The Conversation, and a 54% increase in the domestic energy price cap in April, the average household might see a rise of nearly £700 for energy bills. People will need to tighten their belts.
And it will also mean holidays become more expensive:
- Airfares are increasing due to inflation costs, rising energy costs and seasonal demand, as reported by The New York Times. Airfares in February 2022 were up more than 12% on the previous year, when people were beginning to get vaccinated. Whilst analysts believe these increases in fares are more likely related to a post-Omicron surge in travel demand, many believe the Ukraine war will push these fares even further upwards later in the year.
- Hotels in Europe are noticing the increase in energy costs, with an increase of 35% on a nominal basis since February 2019. There is also an increase in payroll expenses for hotels, meaning that hotels are finding it harder to recover from the pandemic and may need to pass on these costs to customers.
- Customers who have booked with tour operators for increased security and less hassle, might also be surprised to discover that they may be charged more, even after they’ve booked. The Telegraph reported how U.K. tour operators are allowed to charge more, even after being paid, by sending an additional bill, possibly adding hundreds of pounds to a trip.
There are clear ways to lock in prices now–book flights independently before prices go up or check out the surcharges that tour operators are allowed to pass onto customers before booking with them.
Finally, as noted by The Telegraph, it might make sense to stay closer to home, as there is far more capacity for costs to rise for long-haul flights, which obviously use more fuel.