Summer holiday plans upended as soaring costs reshape European travel

Summer holiday plans across Europe are being significantly reshaped as travellers contend with soaring costs and geopolitical tensions, prompting a shift towards more cautious, closer-to-home, and often last-minute bookings. Many are now opting for shorter trips and alternative modes of transport, wary of rising airfares and potential disruptions.

Greg Abbott, a 54-year-old Britain-based Australian, exemplifies this trend. He is planning a cycling trip in Austria, a festival in Barcelona, and potentially a yoga retreat in France, but is keeping his options open and staying closer to home. "We'll almost certainly be doing short-haul Europe, and almost certainly be doing trains, because they run on electricity," said Abbott, head of operations for a broadcasting company, highlighting cost as a primary concern. "The prices are just crazy at the moment."

This sentiment is echoed across the continent, where holidaymakers are adapting to a landscape of $100 oil, tight jet fuel supplies, and the Middle East conflict disrupting popular routes. Susanne Dickhardt, co-founder of camper van and motorhome hire firm Roadsurfer, noted: "We observe travellers becoming more cautious and deliberate." She added that most are adapting rather than cancelling, opting for nearer destinations, driving, and choosing formats that keep expenses down.

The tourism and aviation sectors are particularly exposed to the ongoing conflict. Jean-Francois Rial, CEO of tour operator Voyageurs du Monde, reported a significant drop in business. "You've got a war happening – a major war," he stated, adding: "People get nervous; they don't want to travel anymore." His firm saw business decline by around a quarter in March, easing to about a 10 per cent fall in April.

Airlines are facing immense pressure on their profits, with jet fuel prices nearly doubling. Air France-KLM anticipates a $2.4 billion increase in its fuel bill this year, while Lufthansa and British Airways owner IAG projects rises of approximately $2 billion each.

The recent collapse of US low-cost carrier Spirit has fuelled fears that others could follow, though European budget carriers like Wizz Air and airBaltic, despite thin margins, are considered less vulnerable. Rohit Kumar, vice president of corporate ratings at Morningstar, warned: "Given that summer is the most profitable period for airlines, any disruption to volumes or costs during this peak season will have a material impact on earnings."

Travellers are increasingly delaying their decisions. Jerome Vayr, president of France-based Vacances Bleues, observed that plans are often made just days before departure, and trips are shorter. "Last-minute bookings are rising significantly, by around 15 per cent," he said. "I think people are waiting to see what will happen with inflation, waiting to see whether or not they'll be able to travel abroad."

While overall demand remains resilient, destinations are shifting. Ricardo Fernandez Flores, head of Spanish online travel agency Destinia, noted that Spain, Greece, and Portugal are now viewed as safer bets, with a rise in self-drive holidays.

Jay Wardle, president at travel data group Sojern, highlighted: "What we're seeing in the data is not a slowdown in travel demand, but a shift in where travellers are choosing to go," pointing to well-connected, stable Mediterranean markets. Gabriel Escarrer, CEO of Spain's largest hotel chain Melia, expects strong bookings in "safe-haven" regions. "Spain and the Caribbean are far away enough from conflict zones and close enough to key source markets to offer a sort of safe-haven destination this summer," he explained.

Rail travel is also experiencing a surge. Alvaro Ungurean, director of Trainpal, reported a 25 per cent rise in Eurostar ticket sales, with nearly twice as many Britons planning to travel by train in France this year. Even business trips are shifting, with rail bookings increasing, according to Charlie Sultan, president of Concur Travel at German software maker SAP.

Other individuals are finding creative ways to manage costs or are simply postponing their plans. Alice Woodhouse, based in Hong Kong, intends to stay in Asia and utilise airline miles to offset soaring fares. "With ticket prices so high, I've been looking at where I can use my airline miles. Southeast Asia or maybe Taiwan is most likely," she said. Meanwhile, Diego Dutra, who runs a corporate relocation firm from Portugal, is avoiding flying and may opt for a road trip instead of visiting family in Italy. "We're just going to postpone until things clear up a bit," he concluded.