Corporate TravelUpticks across air, hotel and ground transportation on the back of a strong global economy.

Higher travel pricing expected next year: 2018 Global Travel Forecast

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Photo Credit: Kalawin/iStock

“The higher pricing is a reflection of the stronger economy and growing demand,” said Kurt Ekert, president and CEO, Carlson Wagonlit Travel. “The global numbers from this forecast should be considered strong leading indicators of what 2018 will mean for global businesses, as we anticipate higher spending.”

Travel prices are expected to rise by nearly 4% next year, according to the fourth annual 2018 Global Travel Forecast.

Global airfares are expected to rise 3.5% while hotel prices are expected to be 3.7% higher. Ground transportation such as taxis, trains and buses are expected to rise slightly by 0.6% – significantly below the 3% inflation forecast for 2018.

“The higher pricing is a reflection of the stronger economy and growing demand,” said Kurt Ekert, president and CEO, Carlson Wagonlit Travel. “The global numbers from this forecast should be considered strong leading indicators of what 2018 will mean for global businesses, as we anticipate higher spending.”

Airfare Projections
While airlines are expected to add 6.0% capacity next year, rising crude oil prices are expected to result in increasing global airfares. In Asia Pacific, a 2.8% rise is predicted, thanks to rising domestic demand in China and India. 

However, travellers will have no lack of choice with the increased segmentation of basic fares among large carriers, allowing them to choose from basic economy, restricted fare versus various upgraded fares.

Hotel Projections
Suppliers are progressively moving corporate buyers away from fixed, negotiated hotel rates and toward dynamic rate pricing, according to the study. There is also a global trend towards “smarter” hotels, with sophisticated technologies in messaging, in-room entertainment and more. 

Across Asia Pacific, hotel prices are likely to rise 3.5% - with a large discrepancy as Japanese prices are expected to fall 4.1%; conversely New Zealand is set to rise a full 9.8%. 

With newly merged hotel groups, especially in high-volume markets such as Bangkok, Beijing, Shanghai and Singapore, buyers should anticipate a more challenging discussion ahead.


Ground Transportation Projections
Continued uncertainty in mining, and a cautious recovery in the oil and gas industry will result in flat rates for 2018 in Asia Pacific. Business continues to grow in China as most major car rental and sharing economy suppliers have a presence. Sharing economy suppliers Didi Chuxing in China, Ola in India and Grab in Southeast Asia have all achieved economies of scale that make them key competitors to more traditional car rentals firms and taxis.

“Geopolitical risks, uncertainties in emerging markets and ever-changing political environments in Europe and the United States mean today’s travel professionals have more than ever to take into account when building their travel programmes,” said Jeanne Liu, vice president of research, GBTA Foundation, the research arm of Global Business Travel Association. 

“The most successful programmes will have to keep a watchful eye on both geopolitical risks and a rapidly-changing supplier landscape as they reevaluate strategy often and adapt as necessary.”

The full report is available here: http://www3.gbta.org/l/5572/2017-07-13/574knd


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