The trial revival in the passenger industry has stalled as airline and hotel bookings have fallen in the last two weeks due to new border restrictions following the advent of the Omicron variant.
Although travel chiefs say it is too early to assess the impact of the variant on the sector, new data suggests the worst crisis may not pass for nearly two years since the first coronavirus outbreak.
Affected areas include lucrative transatlantic airlines, according to research group ForwardKeys, while STR data from the hotel industry monitoring show a decline in room occupancy in Europe.
The impact on transatlantic routes has been particularly severe. After a quick recovery since the Biden administration announced it would open its borders to passengers in November, Omicron has stifled a revival in demand for these long flights.
Indeed, the recovery was so rapid that by November 24, the day Omicron was reported to the World Health Organization, bookings between the UK and US rose 2 per cent above 2019 levels, providing a lifeline for airlines such as British Airways and the Virgin Atlantic.
But ForwardKeys says flight reservations issued between Nov. 25 and Dec. 7 were 26 percent below 2019 levels.
Reservations from the EU were also affected, from 22 per cent to 50 per cent below the 2019 level over the same period.
The impact was also felt on shorter flights and leisure trips, as several airlines and travel companies publicly warned of the hit of new variants and travel rules.
Inbound flight bookings for the UK for the last week of November fell 63 per cent from the same week in 2019, compared to a 49 per cent drop in the previous week due to increased cancellations, Visit Britain reported on Friday.
Heathrow Airport also warned of a “high level of cancellations” by business travelers concerned about being trapped abroad by UK travel rules.
Tui, Europe’s largest tour operator, said this week that fears about Omikron began to affect bookings, while easyJet also reported “some easing of trading” by the end of 2021, but noted that the blow was less severe than at the time of travel restrictions introduced earlier during the pandemic.
Airline chiefs hope the variant will prove to be a short-lived shock that occurred during one of the quieter periods in the industry.
The winter months are rarely cost-effective, especially in Europe, but the situation would be more difficult if the disorder bleeds into reservations for next summer.
For the hotel industry, the impact of declining room occupancy was most severe in countries such as Austria and the Netherlands where stricter curbs existed. Austria has introduced a strict ban on the movement of unvaccinated citizens.
But all countries suffered a decline as consumer confidence declined.
Forwarded bookings for hotels in London, Paris and Madrid have all fallen in the past week, according to STR data.
Data from Guesty, a short-term rental management company, shows that bookings in the U.S. fell 22 percent in the first week of December from the week before.
Shares of travel companies have been volatile since the emergence of the variant, initially falling but then partially recovering amid hopes that Omicron will not cause serious illness among those vaccinated.
“I think we are all optimistic that governments will reconsider these restrictions quickly,” said Willie Walsh, chief executive of the International Air Transport Association, this week.
Another salvation for the industry is that although bookings have slowed, especially from the UK, which has reintroduced a tighter testing regime than its European neighbors, many buyers are shifting bookings to next year.
“As for cancellations, where restrictions mean airlines don’t fly, it’s a simple refund to the customer. If airlines continue to fly, it usually moves customers to another date, ”said Simon Cooper, CEO of On The Beach Package Arrangements.
Much depends on the virulence of the Omicron strain and how governments react to its spread, but customer booking patterns suggest there is confidence that travel will be easier next year.
Operators said the accumulated demand for overseas vacations, which began with easing restrictions across Europe and the US, is not declining this year.
Fritz Joussen, CEO of Tui, said this week that the company is receiving bookings for next summer’s season with high prices and high margins.
The group said it had 2.1 million bookings for the summer of 2022 at the end of November, although that’s 3 percent less than the number of summer bookings it had at the same time in 2019.
Prices, however, rose 23 percent, due to customers who wanted to spend the savings made during the closure of higher-end hotels and longer vacations.