© Alfonso Salguiero

LFT Travel Insights

21.12.2023Market research

LFT Travel Insights

The year is drawing to a close and it’s time for our final Quarterly Report for the year 2023. This overview starts with a look back at the travel demand during the last months. It goes on to summarise the current search and booking data concerning hotels, flights, campsites and travel themes which provide an outlook for tourism in Luxembourg in 2024.

As a recap, Luxembourg’s primary target markets are France, Belgium, Germany, The Netherlands, Switzerland and the United Kingdom. Our secondary markets extend southwards to Spain and Italy, across to Austria, and up to Ireland and Denmark, all populations which show a growing interest in our destination. We mostly compare to 2019, in other words pre-Covid times when tourism numbers were at a high.
 

Nights in paid accommodation (Jan-Sept vs. 2019)

- Hotels -3%
- Campsites -3% 
- Youth hostels -2% (Jan-Oct)
- Rentals -35%
- RevPAR in hotels 106€ (+1 % Jan-Oct vs. 2019)
- Despite this, 59% of hotels expect loss in gain for 2023 due to high costs.

High travel demand in summer

Demand for travel is climbing back to pre-pandemic levels and the provisional figures show a strong summer in Europe. Overall, the Netherlands and Germany are among the best-performing outbound markets, while demand from the UK is being hampered by the weakness of the pound against the euro.

In parallel with the strong dollar, travel demand from the US is very strong, with many European trips booked in advance. Domestic travel remains favourable among many travellers for cost reasons, especially in China and Japan. Travel from China is still -70% below 2019 records, but better since September.

Despite the heat waves and fires in southern Europe, there were hardly any cancellations on mostly pre-booked summer travel. There was some redirection of last-minute trips for northern Europe including Luxembourg, for example from Spain and Italy in July, also spilling over into the autumn. The travel decisions to travel out of season are also price-driven, not only due to the weather.

Travel remains a consumption priority for many people: the share of the travel budget in total household expenditure has risen to almost 9%. Savings are made in other areas in order to be able to travel (60%).

The ongoing pandemic after effects of excess savings as well as pent-up demand by wealthier households still drive travel recovery, especially in the luxury travel segment, which has grown disproportionately in the last two years.

Travel expenditure has increased, but not always intentionally, and rather as a result of price hikes rather than the pursuit of a better-quality travel experience.

Visitor activity in Luxembourg (Jan-Oct vs. 2019)

- Tourist Info centres +7%
- Castles +18%,
- Leisure sites +22% (Parc Merveilleux, Mullerthal Trail)
- Museums -7% (although +20% compared to 2022)

Future travel intent

The hotel occupancy rate forecast is 69% for November, 63% for December, and 53% for January. The improvement for Dec-Jan is down to business travel, which is now 4% over 2019 levels. At the time of publishing, there was still potential for last-minute leisure demand for the Christmas and New Year period.

The hotel demand for future stays is up 12% from 2022, and up 2% vs. 2019. For flights, demand is -11% vs 2019 levels and flight capacities until April 2024 are +7% vs. 2019.

68% of Europeans want to travel by April 2024 according to the latest European Travel Commission (ETC) study. This represents a slight decline, but the number of trips per person increased from 1.8 to 2.2 and there is increasing polarisation. The strongest growth in travel intent this season for Luxembourg is for culinary and event trips, and more widely winter sports, cruise and cultural trips. Train travel is at an all-time high: 18% of Europeans plan to travel by train.  

Travel in Europe in 2023 stands at -9% vs. 2019. For 2024, the 2019 levels should be reached in Europe, and in Western Europe +9%. Full long-haul leisure recovery to Europe is on track for 2025. Risk factors to the outlook remain the wars in Ukraine and Israel, inflation, weak economic growth also due to the restrictive monetary policy, strikes and possible rising oil prices.

Value-for-money is becoming increasingly important. There is no one-size-fits all savings strategy as the areas in which travellers intend to save in 2024 are very different from those pursued in 2023. Preferences are shifting away from choosing cheaper destinations to travelling off-season and looking for bargains and special offers.

If you would like any further insights or to take part in our future surveys, please contact us.