The European travel industry may not fully recover from the Covid-19 pandemic until 2023, according to a new report published by Bloomberg Intelligence.

However, domestic-focused businesses could see some growth in the second half of this year.

Pent-up holiday demand and the uneven pace of vaccinations across Europe gives some hope for recovery for UK business this year, BI finds.

However, companies relying on business-related travel face ongoing challenges from a switch to remote working which will have a knock-on effect on other consumer and real estate companies, the report adds.

Ongoing restrictions on international travel and consumer wariness may mean international-focused businesses won’t see a return of holiday spending until 2022/23 and the hotels sector may see a wave of consolidation as independent operators are bought out.

“Vaccines are a positive catalyst for European-listed travel companies but uneven recoveries across leisure, business, domestic and international customers may drive a wedge between their performances.

“Covid-19 mutations or slower inoculations in some areas could mean airlines, tour operators, and concessions that rely on long haul wait longer,” said BI industry analyst, Conroy Gaynor.

The BI report, Travel Recovery Looks Uneven for European Names, highlights World Travel & Tourism Council figures showing European firms suffered a 63 per cent GDP loss last year compared with 53 per cent globally.

Another missed summer for holidays due to international travel restrictions could raise financial concerns for the likes of TUI and IAG while domestic-focused businesses will benefit with Whitbread, Accor and Intercontinental Hotels Group well-placed.

The same domestic recovery will also benefit Ryanair Wizz Air and other low-cost airlines while long haul airlines such as IAG will continue to struggle and the financial impact will be felt for years on balance sheets with operators such as Air France requiring government support.

Empty airports will also mean trouble for firms running concessions such as SSP, Autogrill and Dufry while WH Smith should escape the worst as its high street stores have remained open during the UK lockdowns.

Tour operators such as TUI, On the Beach and Jet2 should see a recovery in 2022 if they can survive the financial strain on balance sheets this year as they don’t rely on the business travel market which is likely to go through structural changes.

Recovery in the European travel market will be a test for whether the pandemic has changed behaviour permanently, BI says.

The natural online market, for instance, may be higher after the pandemic as consumers will have changed habits.