Personal finance

Russia-Ukraine war is having a limited impact on Europe vacation bookings, experts say

Travelers booking luxury trips to Europe have not canceled amid the Ukraine war, says travel advisor Jessica Griscavage of Runway Travel. Pictured, Grignan, France.
Westend61 | Westend61 | Getty Images

As the Russian invasion of Ukraine continues with no end in sight, how are Americans’ European vacation plans being affected? It depends on whom you ask, but overall the answer seems to lie somewhere between “not at all” and “slightly.”

Travel app Hopper noted a drop in flight searches for the Continent as early as February, along with a notable rise in airfares. Yet one travel advisor says she’s seen no decrease in enthusiasm for European bookings or departures from her clients.

Jennifer Griscavage, founder of Runway Travel, an independent affiliate of McLean, Virginia-based McCabe World Travel, has been “very busy booking European travel” despite the war in Ukraine.

“The biggest impact we have seen is concern about traveling to any of the countries that share a border with Russia or the Ukraine,” she said, in particular by clients booking a “bucket list” trip to the Russian port city of St. Petersburg as part of a Baltic Sea cruise.

“Unfortunately, cruise lines have had to cancel stops in St. Petersburg [so] most of our clients have moved these sailings to 2023,” she added.

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That news isn’t great for destinations near the conflict zone or bordering either Russia or Ukraine, as they had already suffered larger drops in overall visitors due to the pandemic, according to the European Travel Commission in Brussels. The Czech Republic saw an 81% fall in arrivals last year compared to 2019, followed by Finland, at -80%, Latvia at -78%, Estonia at -77%, Slovakia at -76% and Lithuania at -74%, said the ETC.

However, the picture may be brighter for destinations farther west. Despite “some mild concerns,” Europe is “still a go” for Runway Travel’s largely well-heeled clients. “Italy, Greece and France in particular have been very popular,” Griscavage said.

Audrey Hendley, president of Global Travel and Lifestyle Services at American Express, said while the impacted areas aren’t major destinations for customers, the company is matching card member donations, and donated $1 million to relief efforts and provided 1 million hotel room nights to support refugees.

“These are not large destinations for us,” she said. “However, every destination is important; every customer is important.”

Researchers at Hopper report an impact on search demand, bookings and airfares across Europe in the weeks leading up to, and following, Russia’s Feb. 27 assault on Ukraine.

According to their report “How is the Russia-Ukraine War Impacting Travel?,” flight searches for trips to Europe (apart from Russia and Ukraine) are 9% below expected levels given pent-up demand for travel after the omicron variant surge. Booking volume had begun to pick up in January through mid-February as omicron subsided but have now returned to levels seen at the beginning of the year.

“That’s not necessarily a strong decline,” said Adit Damodaran, pricing analyst at Hopper.

“It’s just that [searches] had been increasing at a certain rate, but now it’s kind of tapered and leveled off below where we would have expected,” Damodaran said.

The invasion seems to have had less of an impact on Hopper’s existing transatlantic bookings than Covid did. Whereas about 20% of the app’s customers who’d purchased “cancel for any reason” protection with their Europe trips exercised their right for a refund amid the pandemic, just 15% have done so during the current crisis in Ukraine.

Those just considering booking are more hesitant. They’re not going make a new booking to Europe.
Adit Damodaran
pricing analyst at Hopper

“It could be that a lot of our travelers are going to Western Europe,” Damodaran said. “If they’ve already booked that trip they might just figure, ‘I might as well just continue with it.’

“But those just considering booking are more hesitant,” he added. “They’re not going make a new booking to Europe.”

Travelers not taking planned European trips are postponing rather than booking alternate destinations, said Damodaran. “In a more normal year, Europe would be about 30%, or almost one-third, of our bookings [and] it’s now about 15%.” he said.

Flight searches and actual bookings may be down but airfares are up, Hopper found. Fares to Europe are 16% higher month over month. That might seem like a lot, but, according to Damodaran, the price of jet fuel rose 70% in 2021 in the wake of the pandemic — and then 30% again in the first three months of this year alone, going to $2.86 a gallon from $2.20, according to the U.S. Energy Information Administration.

“The magnitude of what we’ve seen just since the beginning of 2022 has been huge,” he said. “We expect that increase in jet fuel prices to show up in airfare.”

To wit, domestic U.S. airfares are up 36% since Jan. 1.

“We usually expect that to be closer to 7% to 8% in a more normal year like 2019,” Damodaran said. Carriers usually eat some of the cost of more expensive jet fuel “because it eventually affects travelers’ willingness to pay.”

Moscow’s attack on Ukraine and the impact on global energy markets could make an already bad state of affairs worse.

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