Hoteliers in Western Europe anticipating a hot summer of high prices thanks to the ongoing Iran War are already being warned to avoid profiteering from the situation.
Following the commencement of hostilities in February, which has seen Iran target much of the Middle East and beyond as far as Cyprus with rocket and drone attacks, the region’s Easter holiday business has been wiped out.
Now, with an immediate end to hostilities looking unlikely as both sides threaten further escalation in the fourth week of the war, Western Europe countries including Portugal, Spain, Italy and France are expected to be key beneficiaries of the situation.
However, concerns are growing that hoteliers will take advantage of an essentially captive European market and increase their prices for summer 2026.
Airlines and tour operators are already feeling the impact, with Jet2 chief executive Steve Heapy revealing that the airline and its in-house operator Jet2holidays, which is licensed to carry more than 7 million passengers for the year from 1 April 2026, is already dealing with changing consumer behaviour.
In a video message to 350 delegates at its annual conference in Cadiz, Spain, in March reported by travel trade publication TTG he warned: “Bookings to Cyprus and Turkey are drying up, cancellations are up and our aircraft are emptying."
Heapy says as a result Jet2 staff are now working on cross-selling customers to western Mediterranean countries where demand is holding up but where they have urged hoteliers not to be “too greedy” when it comes to pricing.
AGB Associates managing partner and former head of ABTA’s legal services Alan Bowen agrees that Western Europe is already seeing an uptick from the European market , with Portugal, Spain, Italy, Malta, Bulgaria and Greece all expected to be key beneficiaries.
However, he has warned hoteliers against the temptation of taking advantage of the current situation and hiking prices accordingly.
Bowen says: “You’ve got to get customers back in 2027 and if you charge them too much now they are not going to come back next year; it’s all about getting repeat business which is so much easier to get than having to find new customers.
“These people who are booking now instead of going long haul through the Middle East can potentially spend a lot of money on a four-star hotel in Spain and when they find it’s nothing like a four star in Dubai, which it isn’t, then they won’t go back.”
Families forlorn
Bowen also predicts it is the family and late markets that will be worst hit by current events which will only drive prices in one direction, regardless of whether or not hoteliers in popular destinations resist the urge to ramp up prices.
He says: “The family market for the peak season hasn’t sold particularly well at this stage as people have been waiting in the hope that they are going to get a last minute deal but with oil going up, and it really is, fares are going to go up and holidays aren’t going to come down in price.
“With increased hotel prices due to demand and increased fares due to the cost of oil, last-minute holidays are going to be potentially more expensive than they are now. If you really want to go to Spain or Portugal customers need to book now rather than leave it to the last minute.”
Meanwhile, Heapy argues that Cyprus remains a safe destination, adding: “Cyprus is still far enough away that you can still travel.
“We’re doing what we can to understand what’s going on and how we can work our way through it."
He is also predicting a swift return in demand in both Cyprus and Turkey once the situation has stabilised, especially if hoteliers introduce special offers to boost demand.
While Michael O’Regan, a lecturer in tourism and events at Glasgow Caledonian University’s Glasgow School for Business and Society agrees that Cyprus will suffer this summer following the attack, it is mainly the British market that will be impacted as the missile was aimed a UK military base,.
He adds: “Cyprus being hit has been far more amplified in the UK thanks to its links to Cyprus, it will impact the UK market far more than European ones.
Meet the markets
The contained market means Tourism Economics managing director, EMEA David Goodger is predicting travel growth of about 5 per cent in Europe this summer, fundamentally fuelled by the European market.
He adds: “It’s going to be a modest growth story for Europe with an increase in short-haul travel.”
Goodger says the Asian market will be hardest hit by the Iran war as between 35 per cent to 40 per cent of travel between the two regions was transiting via the Gulf’s three key hubs in Dubai, Abu Dhabi and Qatar, options that are now unavailable.
He adds: “There are alternative routes available but there is tighter capacity on those and you are now looking at longer distances flown and more fuel burnt. If you’re in an era of elevated jet fuel prices then that’s higher costs to be borne by passengers.”
Meanwhile, the Chinese market, which was finally showing signs of returning to travel in volume, will have been dissuaded from long-haul travel by the war, Goodger adds.
He says: “We were looking at very strong growth from China as it was starting to come back but safety is absolutely paramount for Chinese travellers coming out of the post-Covid world.”
Goodger said despite a slow start the North American market to Europe outperformed expectations last year with growth of between 5 and 6 per cent.
However, he expects that growth to half this year to 3 per cent or less, adding: “There has been a slow down in the US economy and a bit of a slowdown in travelling.
“Whether they are dissuaded by the higher prices or even more by safety concerns, we still think North America will be a growth market for Europe.”
So while growth is on the cards in Europe for 2026, it remains to be seen how hoteliers handle it pricewise and whether or not they keep an eye on the future repeat customer base or simply harvest as much as possible now in a deeply uncertain but present market.