Two thirds of Germans plan to travel on holiday this winter , Source: Glade Optics / Unsplash

Inflation is putting the brakes on Austria’s post-Covid tourism rebound

Inflation is putting the brakes on Austria’s post-Covid tourism rebound

There is reduced demand from Austrian and German tourists for winter trips, and while on holidays consumers tend to spend less

Inflation has impacted the tourism sector in Austria and brought the post-pandemic recovery to a screeching standstill, according to a new study by the Austrian Institute of Economic Research (WIFO).

Some estimates say that the summer tourist season and the following winter season in January and February will bring in similar yields as 2021, while other estimates say that demand has generally fallen.

Also, the summer of 2022 saw an increase in domestic tourists, however, WIFO reports that consumers have reduced their spending, as they try to save on restaurants, services and even accommodation. This, they point out, could mean that tourism services tailored for more high-end consumers could fare better in the coming months, as the inflation and cost of living crisis have impacted that group less.

The sector has not recovered to pre-pandemic levels

According to a press statement by WIFO, there were around 78 million overnight stays in Austria this summer season. For comparison, this is 1.4% lower than pre-pandemic levels in 2019. Also, despite many consumers reporting a cutback in expenses, researchers have a cautious optimism by expecting a 5% difference between the winter season of 22-23 compared to 2018-2019.

At the same time, much of the tourism sector has been carried by domestic demand, with 24.3 million overnight stays in 2022 – a new record and a 4.4% increase compared to 2019. Also, international travellers have started returning to Austria, as 2022 saw an increase of 26.5% compared to 2021. Nevertheless, demand is still under 2019 levels by about 3.8%.

These low tourism numbers have impacted the total yield of the industry, with summer 2022 estimated to have brought in 14.7 billion euros, just 0.8% more than 2019. However, considering the strong inflation in the tourism basket of goods, revenues would be considered 14.7% lower if the price were adjusted to the summer of 2019.  

Plans for the winter season

According to the research, the experts at WIFO expect that the winter season of 2022-2023 will be even weaker with inflation on essential products and services and war-related distortions. Food, housing and energy have had a significant impact on the sector and tourists’ holiday decision-making.

Furthermore, recent surveys of hotel businesses and private households in Austria and Germany revealed that turnover expectations of many businesses for this winter are barely above last year's revenues. Also, only 70% of Austrian respondents and about two-thirds of Germans stated that they definitely intend to travel this winter.

This is a significant drop to previous years and with reduced purchases, the sector is in for a rough season.



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