European Summer Travel Spending Set to Rise, Driven by Falling Costs and Renewed Confidence
A projected 10% increase in spending is expected this summer as Australians reignite their passion for European travel, according to new data from one of the nation’s largest banks. While a full recovery to pre-pandemic levels isn’t anticipated, the uptick signals a positive trend for the travel sector heading into the peak June-August season.
Rebound Fueled by Economic Shifts and Airline Capacity
ANZ predicts its customers will spend up to $280 million during their European travels this summer. This represents a significant improvement over 2024, when both total spending and average spend per customer declined despite over 100,000 Australians traveling to the continent. The bank’s analysis, based on early trends in hotel and airline bookings, reveals an 11% increase in bookings between January and May compared to the same period last year.
However, the projected $280 million spend falls short of the record $313 million achieved in 2023. A senior official stated that the bank did not offer a specific explanation for the anticipated increase, acknowledging that it won’t reach the previous year’s peak.
Several economic factors are likely contributing to the renewed interest in European travel. Consumer confidence has shown improvement since 2024, although it remains elevated compared to 2023 levels. More significantly, interest rates have decreased from a 12-year high, easing the financial burden on homeowners. While disposable incomes haven’t seen a substantial increase, the reduced mortgage repayments are freeing up funds for discretionary spending, such as travel.
Europe’s Inflation Cools, Airfares Decline
Like Australia, Europe has been grappling with inflation. The European Union experienced a peak of 11.5% inflation in late 2022, but rates have since begun to cool. While falling inflation doesn’t automatically translate to lower prices – it simply indicates a slower rate of price increases – it contributes to a more stable economic environment.
A key driver of the anticipated travel rebound is the decline in airfares. Recent analysis indicates that falling jet fuel prices have directly lowered the cost of flights. Furthermore, global capacity – the number of available seats on planes – has increased compared to both last year and pre-pandemic levels, further contributing to lower travel costs, according to corporate travel advisors FCM Consulting.
“Our data shows that customers are reigniting their passion for European travel. We’re seeing strong growth in early planning activity,” said Yiken Yang, ANZ’s managing director of everyday banking. “While we may not hit the $313 million peak of 2023, 2025 is shaping up as a vibrant resurgence for the travel sector.”
Beyond Europe: Alternative Destinations Gain Popularity
While Europe remains a popular destination, Australians are also increasingly exploring alternative options. ANZ data shows a 3% increase in spending on non-European destinations during the June-August period in 2024. Indonesia, New Zealand, Thailand, and Japan were among the most favored locations, aligning with data from the Australian Bureau of Statistics.
Additionally, Hong Kong and Sri Lanka are emerging as “hotspots,” experiencing “significant” year-on-year growth in travel spending. This diversification suggests a broader trend of Australians seeking value and unique experiences beyond traditional European destinations.
The resurgence in travel spending signals a positive outlook for the industry, as consumers prioritize experiences and take advantage of improved economic conditions and falling travel costs.
