Eco Week

Eurozone: “have money, will travel”


Since last weekend, the summer holiday season has really started and based on media reports as well as business surveys, activity in the tourism sector should be strong. Pent-up demand probably plays an important role, considering that tourism expenditures and nights spent in hotels are still below pre-Covid-19 levels. Another factor is the strong rebound in consumer confidence on the back of a more positive assessment of the economic outlook and the personal financial situation as well as a more benign view on the inflation outlook. The stock of excess savings accumulated during the lockdown may also play a role as well as changes in the allocation of household spending. Going forward, the outlook will probably be more challenging.

Since last weekend, the summer holiday season has really started. As usual, media report about record traffic jams on the highways towards holiday destinations and people queuing in airports.

The tourism sector has high expectations. Back in May, Reuters reported that early bookings suggested that Italy, Spain, Greece and Portugal could receive record tourism revenues this year[1]. Business surveys by the European Commission show that in the sectors ‘accommodation’, ‘food and beverage service activities’ and ‘travel agency, tour operator reservation service and related activities’, only a low percentage of respondents consider insufficient demand as weighing on their activity (chart 1). This implies a very positive assessment of the business situation, which hasn’t been as good since 2007, a year before the global financial crisis[2].