No surprise that the Euro financial crisis has major consequences for its 17 members, but it also has an impact on the world travel industry in ways that are both predictable, and in some cases surprising.
Take hotels, for example. No shock that Hyatt Hotels Corp. says it is weighing the financial crisis in evaluating its expansion plans.
“The situation in Europe is one of the factors we consider when thinking about a particular acquisition, because of the foreign-exchange risk,” said Hyatt Chief Executive Mark Hoplamazian, during a meeting with Wall Street Journal editors and reporters.
Concerns about the regional debt crisis and the possible break-up of the Euro zone could jeopardize decision making on two proposed European deals. Hyatt operates 21 hotels in Europe, and the instability of Euro is already making the hotel group reconsider launching new properties.
Hotel Occupancy in India Impacted
The crisis is also impacting the Indian hotel industry. Occupancy rates are not going up as fast as they did in the past, and the mood among hoteliers is “one of caution,” says the Associated Press. In addition, Indian hoteliers are having trouble raising their rates to improve their profitability.
“Rates are not going to be high as hotels are likely to be cautious given the global economic slowdown. Due to the Euro crisis, hotels are focusing on maintaining demand rather than pushing up rates,” said Kaushik Vardharajan, Managing Director at travel consulting firm HVS India.
All aspects of inbound tourism are static “due to the impact of inflation and the Euro crisis,” says Anil Madhok, managing director, Sarovar Hotels and Resorts.
Cruise Lines Trying to Fill Mega-Ships
It is still too early to tell but the cruise business, already rocked by the Costa sinking, could find next summer during the busiest season that those large new mega-ships in the Mediterranean will be struggling to fill all their berths, says Travel Weekly.
“Cruise lines with increased capacity in the Mediterranean next summer will struggle to attract more US passengers due to the Euro zone financial crisis,” the site says.
By all accounts, Greece is the worst off among the union members. That will probably not improve anytime soon. “In some places, the bad Greek economy combined with fewer tourists over the past three years may create a perfect storm. It just may not make financial sense to refresh and open up that seasonal hotel or restaurant,” writes About.com.
The impact will turn tourism growth and development to less touristy-locations and islands.
On the brighter side, as far as consumers are concerned, “for many world currencies, the exchange rate on the Euro is improving in their favor relative to recent rates. This means a cheaper vacation all around,” says About.com.
Could the impact of a continuing decline or even an elimination of the Euro lead to a budget Europe-destination re-thinking of the entire continet? That is a question raised by Ed Perkins at SmarterTravel.com.
He thinks not, but points out that the media is rife with terms such as “crisis” and “collapse“ of the Euro but he wonders exactly what the means. So what could actually happen? “Nobody knows - or at least nobody is saying,” he writes.
Key Statistics – Travel in Europe (source: European Travel Commission)
- Visits to all of Europe are expected to slow down to 2.3% growth in 2012, compared with growth of 5.6% in 2011.
- European airlines experienced robust growth through September 2011; weekly growth rates were above 6% and averaged a rate of nearly 8% in Q3 2011.
- Room demand grew nearly 4% up to August 2011 and was especially strong in Eastern and Southern Europe, with occupancy rates up 7.3% and 5.2%, respectively.