Europe's Travel Prices Are Finally Falling — What Travel Buyers Are Doing

25.08.2023 - 14:40 / skift.com / Matthew Parsons

Travel prices across Europe have started to decline, following months of continuous hikes in air fares and hotel rates. However, they’re expected to remain highly volatile for several years as the market undergoes a correction.

New data from Spanish corporate travel agency TravelPerk shows travel costs have come down for the first time in 2022, catching up with a travel deflation seen in the U.S. in the third quarter.

The data, which also includes rail prices, covers the fourth quarter so far. And for those two months of October and November, global travel inflation now stands at -8 percent compared to the third quarter, according to the agency.

Tripbam, an auditing and re-booking platform, sees similar trends.

“Seasonality has a big impact on the data,” said Steve Reynolds, CEO and founder. “We always see rates and fares decline between now and year-end as business travel declines and then returns in January, with a steady climb through June.”

Vic Pynn, CEO of procurement platform Vindow, said travel buyers and corporate travel management were now more cautious about long-term commitments.

“We expect to see more rate volatility in the coming 12-18 months as all travel segments continue to normalize,” he said. 

For example, Travelperk’s data has highlighted marked decreases in the UK. Of the routes with the top 10 highest price drops across Europe, nine are to or from London. This follows a peak in prices in the third quarter when UK flights were 96 percent more expensive than a year before.

Overall, European flights decreased in price by 11 percent, but London flights saw the highest price drops of up to 38 percent over the quarter for the Munich route. Air fares to Budapest have fallen 29 percent.

However, Tripbam’s Reynolds said now was the best time for company travel managers to negotiate discounts, because prices will continue to decline this month. “It’s easier to get the static rate you want while rates are down and dropping,” he said.

He added there will be a significant “bounce up” in January that will continue through the summer.

“The key question is what will be the average fare or rate starting in early January,” Reynolds added. “My view is it will be 5 percent higher than it was in 2019 and stay around that level through mid-year.”

European accommodation dipped an average of 7 percent, quarter-over-quarter, with Spain seeing the steepest decline at 10 percent. However, city wise, Portugal’s Lisbon and Finland’s Helsinki bucked the trend. Hotel prices rose 10 percent and 8 percent respectively, but probably because they hosted major technology conferences, Web Summit and Slush, in November, said TravelPerk.

But the deflation was a “very welcome cooling off after the summer peak,”