Global travel prices are ¡°starting to cool¡± in the third quarter of 2025, but Europe seems to be bucking the downward trend seen in other parts of the world, according to the latest Travel Price Index from Advito.

The quarterly report from BCD Travel¡¯s research arm found that intercontinental airfares are ¡°trending downwards¡± in most regions, due to ¡°rising economic uncertainty worldwide¡±, while hotel rates have dipped in North America.

In Europe, the trend is less clear with intercontinental economy fares falling by 3 per cent year-on-year but rising by 3 per cent in business class, which Advito attributed to ¡°the effect of rising carrier surcharges¡±.

¡°Key European airlines have significantly increased carrier surcharges from their home markets, especially in business cabin, leading to fare increases,¡± said Advito in the report.

Advito added that economy fares for short-haul flights are up by 5 per cent year-on-year in Europe, while business fares have increased by 2 per cent. One of the reasons for this upward trend is the reduction in domestic flight capacity in key markets such as Germany, France and the UK.

Hotel prices in Europe are also up by 4 per cent year-on-year - well ahead of the global average increase of 2 per cent for the quarter and a 1 per cent fall in prices in North America.

Advito said the increase in rates in Europe was being caused by ¡°summer demand¡±, as well as major sporting events such as the UEFA Women¡¯s Euro 2025 in Switzerland and Tour de France cycling race.

The UK saw one of the largest increases in rates with a 7 per cent year-on-year rise, while hotel prices also went up in the Netherlands (+5 per cent), Germany (+4 per cent), Italy (+ 4 per cent), Spain (+2 per cent) and France (+2 per cent).

Overall European rail fares also rose by 3 per cent year-on-year ¨C helped by increased demand as domestic air capacity has been cut.

Advito particularly noted a ¡°sharp increase¡± in prices for major international train routes, such as London-Paris and London-Brussels. UK rail prices saw an 8 per cent year-on-year increase in Q3, which was well ahead of other major European markets.

Car rental prices in Europe are expected to ¡°rise slightly¡± by 2 per cent in the quarter compared with the same period in 2024.

¡°The softening demand is mitigated by better fleet utilisation,¡± said Advito. ¡°Car rental companies are further optimising fleet and yield management, maintaining a conservatively planned fleet size.¡±