25 May 2022 | Market Insight, Data science, Rate Insight
For Europe’s most visited cities, the number of arrivals once pushed locals and infrastructure to breaking point, but then the tourists disappeared. Now it is a road to recovery and the question is when will these cities return to pre-pandemic levels and do they want to?
It’s Summer 2019. Venice’s famous bridges throng with crowds jostling for space. Barcelona’s citizens are protesting at the stream of foreign arrivals pouring into their city. Paris’ city government is in discussions about how to manage tourism levels.
A year later and everything changed. Suddenly, what were once the most heavily visited cities in the world were much, much quieter. The question switched from managing the travelling hordes to how to keep tourism businesses going through a global pandemic.
With this in mind, we take a look at how some of the most prominent cities once squaring up to overtourism are faring now, when they will return to pre-pandemic levels and whether this is even their goal in 2022.
Whether it was under the Eiffel Tower, on top of the Rialto Bridge or in the middle of La Rambla, in 2019 travellers thronged past each, with the home cities for all of these icons drawing in tens of millions of annual visitors.
The conversation in 2019 and early 2020 was firmly affixed on a question of too much demand across many of Europe’s tourism capitals.
For Barcelona, Paris or Venice, which will be the cities we will be looking at in this snapshot, crowd management and infrastructural questions abounded. The situation led some to suggest radical proposals to limit inbound tourism.
The arrival of the pandemic halted this conversation, shifting it instead to getting the travel and tourism industries in these key destinations back on their feet, especially since they are central to the economies of these cities.
The shift was dramatic. Barcelona’s hotels association president, Jordi Clos, said in February 2022 that the city’s hotels had lost up to €2.5 billion since the pandemic broke. According to Spain’s statistical authority, occupancy for the Cataluña region, the capital of which is Barcelona, has only moved above 50% once – in August 2021 – in the year between March 2021 and March 2022.
Occupancy rate per bed-places in Cataluña region, Spain
Annual nights spent in Venice 2017 to 2021 (millions)
Similarly, Paris saw occupancy rates crumble, with revenues more than halved in the first half of 2021.
Venice’s accommodation industry lost 21 million nights from 2019 to 2020 as per the Veneto region’s statistical authority.
So where are we today after these exceptional figures?
The answer is a much better place, with demand returning strongly after the toughest years the European hotel industry has experienced in living memory.
Across all three cities, our data shows that interest in travel is soaring and helping these traditional tourism powerhouses to come back strongly in the run up to the peak period of 2022.
Flight Search Evolution Index
GDS Hotel Search Evolution Index
Looking at our proprietary indexes of searches there has been surging search volumes across 2022, which underline the return of consumer confidence and interest in travel.
This can be seen in the Flight Search Evolution Index and GDS Hotel Search Evolution Index charts above. Both use January 2021 as a base point for measurement, giving the search volumes a score of 1 for relative measurement at this initial point.
For flights, the volume of searches for Venice and Barcelona has soared by more than 1500% from the beginning of January 2021 to the time of writing in May 2022. In the latter’s case, the index has risen from one to 17.5 across the time period. Searches to Paris rose more modestly, but have still climbed 12-fold.
The GDS Hotel Search Evolution Index shows a similar overall pattern, with searches for Paris and Barcelona rising 8 and 9-fold, respectively.
Both these indexes are strong indicators of travellers’ interest in these destinations and their intent to make trips overall as well. They show that the dark days of 2020 and 2021 are now behind the Western European travel industry, barring another major exterior event.
A further indicator of the state of the hospitality industry in these locations is the pricing strategy of hotels located in each.
This paints an even rosier picture, with accommodation providers setting, surprisingly, substantially higher rates in Q2 2022 than in 2019.
Percentage change in hotel final prices 2022 vs 2019
The very beginning of 2022 came with rates being set marginally lower than in 2019. The average price level being offered in the market indicates that hoteliers were seeing demand levels continue to fall behind the historical curve for what we would now consider a ‘normal year’, i.e. one not affected by heavy travel restrictions.
As the year progresses, that picture changes dramatically, with hoteliers feeling confident in pricing their rooms above where they were three years ago.
There are some truly remarkable figures we can see from our data in this regard.
For example, pricing in Barcelona went from a low of 27.8% below 2019 levels in February 2022, to 24.3% above them in April, a 52.1-percentage-point shift in pricing. In the same time period, prices in Venice went from 8.5% above where they were in 2019 to +67.9% - a 59.4-point positive movement.
For reference, prices one year ago in May 2021 for Barcelona, Paris and Venice were 38.6%, 17.7%, and 20.6% below the same month in 2019, respectively.
While figures for May 2022 have moderated, pricing across all three cities in this particular snapshot are comfortably ahead of 2019 rates.
Expectations of growth
Another graphic demonstration of returning confidence is how revenue managers have felt they can consistently continue to move their prices upwards as they see bookings and demand indicators coming ahead of their prior projections.
In our data it is possible to examine future pricing for destinations and compare that to prior points.
Looking at average pricing rates for the next 90 days from the point of extraction in mid-May, we can then contrast that with the pricing level set 30 days prior. The change indicates that revenue managers are optimistic about future trends.
Price changes for Barcelona, Paris and Venice hotels for next 90 days compared to 30 days prior
In the case of Barcelona, prices for the next 90 days out from mid-May are 15.8% higher than they were in April of this year. With the same parameters, prices have pushed upwards 10.9% in Venice and 9.4% in Paris compared to a month ago.
Our data shows that prices have been moving consistently upwards and is indicative of strengthening markets in each of the cities examined.
This is not to say that the entire global market is back to steady travel patterns and everything has returned to a pre-pandemic situation, however.
Key inbound markets for these destinations continue to be buffeted by events and the make-up of clientele has shifted in the wake of the pandemic.
Let’s take Paris for example, a city with a traditionally global clientele, attracting big spenders from the Americas and Asia-Pacific.
Origin of searches for flights to Paris
This is reflected in our search data, where there is a diverse origin location of search for flights to Paris in March 2020, in the very last moments before the full extent of COVID-19 became clear.
At that time, 38% of searches originated from Europe. The main other locations were the Americas, which generated 35.5% of searches, and Asia, which was the origin point for 23.5%.
Taking another look at the data at the time of writing, a little over two years later, and the picture is dramatically different.
In the first half of May 2022, Europe was by far and away the dominant source of interest in flights to Paris. Slightly more than 60% of searches came from European consumers at this time, with the share of searches from the Americas and Asia falling to 16% and around 20%, respectively.
The shift indicates that long-distance travel and demand is still not back to where it was and consumers remain more cautious in their travel destinations, preferring to look closer to home.
It seems likely that this is a behavioural trend that will take some time to reverse as well, with coronavirus and global instability still very much in the news cycle and part of the travel landscape.
The state of play
So where does that leave us and do these destinations need to start thinking about overtourism again soon?
The answer is that we are trending back towards 2019 demand levels, but that the ground has changed since 2020.
Cities have been reminded how important tourism is to the economies of each of these global icons of travel. The impact was sudden and drastic, with an industry riding high suddenly brought to incredible lows. That recovery period has been long and painful, with real momentum and return to near normality having to wait until this year.
Although we can see excellent growth in searches, and pricing now exceeding 2019 levels, we are not yet at the level of trips made in 2019 and spending is also down, particularly for destinations that have traditionally relied on cash-rich Asian and Russian travellers, such as Paris. Nonetheless, the direction is clear, and that is towards a much stronger market.
There has also been space to reconsider the structure of inbound tourism in the destinations studied in this piece and to close the gaps between city, citizens and traveller.
Looking at what is historically the most extreme case of overtourism in this subset of cities, Venice, the return to demand may seem an issue and the rise in prices to substantially above 2019 levels could even appear alarming.
However, the greatest issue for Venice is the number of day trip arrivals that come into the city, particularly in peak periods. According to Boston Consulting Group there were some 19 million trips of this type made in 2019, each of which generated just €5 to €20 in spending, whereas overnight stays led to two-thirds of tourism revenue.
In this instance, a strong market for overnight stays is what the city wants to encourage, and it has moved forward with plans to ban cruise ships and introduce a cap and entry ticket system for day trips. This data, combined with local government action, is therefore an encouraging state of play.
Barcelona, for its part, has begun a plan to create more pedestrian spaces, starting with the famous La Ramblas street this year.
Overall, we are looking at a brighter picture and potential future for these cities. The question of overtourism is not going to go away and will remain a concern as demand closes in on previous highs, but the pause in between has allowed a reconsideration and recalibration.
These cities are better prepared to navigate high demand, which is good news, as it appears that this year’s high season is going to be much closer to 2019 than 2020.
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