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Posted May 6, 2019

Alanya, Turkey

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The overall Europe travel picture is rosy, with continued growth and recovery region-wide according to Phocuswright’s European Online Travel Overview. Areas hit by political and financial crises a few years ago are seeing a recovery in tourism, as well as lower unemployment and increased disposable income.

Ever Changing Destinations Choices

As a key example of this trend, Turkey is once again the fastest growing destination in Europe, according to a report from the European Travel Commission. After a rapid tourism decline following political unrest and terrorism incidents in 2016, in 2018 Turkey made a complete turnaround with 47 million arrivals – up 22.3% over 2017, and a new record high for the country. 

Spain and Portugal, meanwhile, saw declines in visitors. This is perhaps unsurprising given Turkey’s renewed popularity. When tourism to Turkey fell in recent years, many travelers chose Spain and Portugal as alternative destinations. Now, with a perceived improvement in safety in Turkey, along with improved exchange rates and more affordable accommodations, travelers are returning to Turkey.

Like Turkey, Europe’s developing countries are also seeing high growth in visitors, including Serbia, Malta, Montenegro, and Latvia – all which had double-digit growth last year. The big question in Europe, though, remains the UK, with continued uncertainty over Brexit. In 2018, the country was already seeing a decline in visitors, with visits down 5.3% over the prior year. Brexit could worsen this trend as it poses challenges to both outbound and inbound travel, as well as staffing in the country’s tourist sector.

For more destination trends check out: 2018 Destination Trends: Robust Growth Continues Worldwide

Tours & Packages Coming Back Strong

Among European travelers, tours and packages continue to make a comeback. According to the Phocuswright report, 2018 saw a 4% increase in bookings for European tour operators, with a similar trend continuing for the next several years.

This segment has traditionally been booked in offline channels, and continues to be the area where travelers prefer to book face-to-face or by phone. Increased investment in online platforms by operators, however, is expected to raise online penetration to 37% by 2022 according to the Phocuswright report.

Recent consolidations and market exits have reduced the number of operators in Europe, especially in the UK, France, and Italy, who now face competition from new angles as OTAs, airlines, and hotels continue to expand their package offerings to their customers.

Read more: Packages Are Making A Comeback, And Google Has Noticed

Cost & Convenience Drive Booking Channel Choices

On a larger scale, OTAs are continuing to compete with direct suppliers in all areas. Suppliers have made considerable gains via investment in better online platforms and improved promotion of direct bookings. Suppliers have also had the advantage of regulatory rulings that enable them to offer lower prices than OTAs and, in some cases, have implemented GDS surcharges that make direct booking more attractive. In 2018, suppliers captured roughly two-thirds of all online bookings. Airline bookings, particular for low-cost carriers, were dominated by suppliers, and by 2022, supplier direct channels are expected to make up 84% of online air bookings.

OTAs, according to Phocuswright, continue to see increased bookings, and are expected to do so for the foreseeable future. The channel reached bookings of €47.9 billion in 2018. OTAs continue to dominate the European hotel sector, with more than two-thirds of online hotel bookings made through their platforms. This is in part due to the fragmented nature of the European hotel market with the prevalence of smaller independent hotels. Smaller hotels tend to rely on OTAs for reaching travelers and have fewer resources to devote to their online booking platforms.

Most of the OTA growth in coming years is expected to come through mobile, with mobile bookings estimated to account for more than a third of bookings by 2022. And like the tour operator segment, the OTA playing field has become much smaller in Europe. Smaller OTAs are disappearing and the big players Expedia and Booking now capture 70% of European OTA bookings.

Payments Pay Off

Overall, the European market saw a 2% growth in gross travel bookings with nearly all segments seeing some time of growth. Europe will continue to be a sought after destination for travelers from Europe and all around the world. The Phocuswright report predicts annual growth of around 3% to bring the market to 320 billion in 2022.

Whether your travel company is based in Europe or elsewhere, paying European suppliers in an ever-changing and competitive market requires a joined up and tailored approach. Partnering with a payments partner who takes a platform approach to business will allow you to achieve maximum acceptance at the best cost, with optimal operational efficiency.

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Anant Patel

Anant Patel

Anant heads up our EMEA and APAC corporate payments operations and is based out of our London office. Anant joined WEX in 2018, bringing over 17 years of leadership experience in the payments industry with businesses such as Mastercard International and First Performance Global. Anant is focused on enhancing our international efforts and scaling our business across EMEA and APAC.


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