Travel market trends as of September 2022

Travel sector stages a powerful but bumpy recovery from Covid, with inflation casting a shadow on the outlook for demand

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Benjamin Rutz
Director, Business Restructuring Services, PwC Switzerland

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Claude Fuhrer
Partner, Deals Strategy & Operations Leader, PwC Switzerland

In this short blogpost we describe the current fortunes of the travel sector. Key words: capacity constraints, supply chain problems, cost-of-living concerns.

“The travel industry is bouncing back from the pandemic, but it’s a shaky recovery that could still be thrown off track by people’s cost of living concerns. Operators might have to be prepared to offer lower-cost options or greater flexibility.”

Claude Fuhrer,Partner, Deals Strategy & Operations Leader, PwC Switzerland

Post-pandemic recovery hampered

The travel industry was expected to bounce back to close to pre-Covid levels in 2022. But the recovery has been hampered by the uneven availability of vaccine, capacity constraints, labour shortages and supply chain issues. Working capital has also been a big concern, as operators contend with having to deliver arrangements cancelled during the pandemic and pay their suppliers.

Our latest survey of consumers shows that there is still strong demand for travel. But while more are returning to the market post Covid, disruption to air travel is putting people off international travel and concerns about the cost of living are starting to make some more cautious.

That said, holidays are still high on the list of spending priorities. Consumers plan to spend more on travel in 2023 than this year, although the net spend intention is +30 versus +40 coming into 2022. This sustained demand could support a certain amount of growth into 2023. Other factors likely to get people travelling again include the declining fear of Covid and the prospect that disruptions to air travel should be resolved. On the other hand, inflation will undoubtedly put pressure on disposable incomes.

In this environment, operators have to understand that the recovery is staggered and adapt accordingly. The challenge of matching supply and demand will remain a balancing act. In an environment of uncertainty, operators may be able to encourage bookings by giving people lower-cost or flexible options.

The current challenges are making operators more cautious: in our July 2022 survey, 60% said they were in recovery or past the worst, versus 95% of respondents in our April 2022 survey.

Consumer spending intention in 2023

Source: July 2022 Strategy& consumer survey

Operator Outlook

Source: July 2022 Strategy& and TTG operator survey

Zooming in on Switzerland

The Swiss travel sector has also profited from pent-up demand post lockdown. But given the way consumer sentiment and planned spending are declining, the recovery risks of slowing down or even come to a stop. Local tourism could feel the effects of visa restrictions for Russian nationals in response to the Ukraine conflict.