You Might Have to Trade Ski Season for a Summer Getaway

(Bloomberg Opinion) -- A resurgence in Covid-19 cases around Europe is the last thing the hard-hit travel industry needs right now.

But airline and hotel groups shouldn’t panic just yet. There’s still a long time to go before next year’s peak summer travel season.

First, some good news. After being decimated by earlier waves of the virus, both European leisure and business travel has begun to recover. Demand for flights, hotels and short-term rentals all improved in October.

EasyJet Group Plc said at a conference this week that Christmas and summer 2022 bookings looked positive, while TUI AG was also optimistic on next year’s busy season. In the U.K., the half-term school holiday in October saw many families swap staycations for sunnier climes to make up for missed trips in July and August, when more stringent restrictions were in place and expensive tests were required for international travel.

Meanwhile, airlines such as Virgin Atlantic and British Airways (part of IAG SA) have been given a boost by the reopening of passenger flights between the U.S. and Europe. Not only do these routes account for a large chunk of legacy carriers’ capacity, they are also very profitable.

This recovery, however, is now being threatened by Europe becoming the epicenter of the latest Covid-19 outbreak. Governments are having to resort to a fresh round of clampdowns. The European Union is recommending a nine-month time limit for the validity of Covid vaccinations for travel into and within the bloc, and is also proposing to prioritize travel for vaccinated passengers. 

At most risk are getaways scheduled for Christmas and New Year. Austria’s recent lockdown looks unhelpful for the nearing ski season. Travelers may also remember that several ski resorts were found to have contributed to the spread of the virus across Europe during the pandemic’s first wave. So far, Brits don’t seem to be canceling because of the situation in Europe, but conditions may discourage some people from booking if they haven’t already.

The biggest casualty could be sentiment toward travel. That matters because almost as soon the Christmas turkeys are cleared away, attention turns to the summer. Just think about all those Boxing Day ads featuring sunny beaches and shimmering swimming pools. The first Saturday after New Year is dubbed “Sunshine Saturday,” because it is the time that families traditionally call the travel agents and book their trips online.

Michael O’Leary, chief executive officer of Ryanair Holdings Plc, said it was inevitable that consumers would be unsettled by the recent news from Europe.

Of course, there are reasons why the damage might not be as severe as feared.

For a start, the spiraling cases are occurring during the traditionally quieter winter period. Although ski resorts could face another lost season, for larger tour operators like TUI, ski and winter holidays are less important than summer vacations. In a typical year, airlines and tour operators make most of their profit in the summer. More winter bookings mean smaller losses in the leaner period, but it is July and August that really count.

Second, booking patterns have changed. Before Covid, the first three weeks of January were the peak period for summer sales. Now families buy much closer to their departure dates. At Thomas Cook, reinvented as an online travel agent, a quarter of bookings are for the next month. The biggest selling month at the moment is December. The next most popular is May 2022.

It’ll be important to watch what happens in Germany — a key indicator for the European travel sector because it is one of the biggest exporters of summer sun-seekers. Germany and the U.K are TUI’s two biggest markets and are roughly the same size in terms of customers and revenue. Another thing to watch: whether the U.S. reconsiders its decision to reopen borders to foreigners.

The current uncertainty makes it difficult for airlines and travel companies to judge how many seats and hotel rooms they will need for next summer. But if cases in Europe peak relatively soon, there should still be demand for holidays during those sun-soaked months.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.

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