Notable gains are expected in Europe and Asia, with China and India’s high-powered economies leading the way forward. However, prices will see only marginal gains, as suppliers rapidly increase capacity to meet demand as they compete for market share.
Demand for international business travel has been on the rebound since last year and is expected to continue growing over the next 12 months, buoyed by a steadily improving global economy and growing confidence among business and investor communities, according to a recent forecast by American Express Global Business Travel (GBT).
Notable gains are expected in Europe and Asia, with China and India’s high-powered economies leading the way forward. However, prices will see only marginal gains, as suppliers rapidly increase capacity to meet demand as they compete for market share.
“Modest increases in fares across air travel and hotel are expected across Asia-Pacific as a result of renewed business confidence within the region, driven largely by the influence of China and India,” said Jo Sully, vice president and general manager, American Express Global Business Travel, Australia & New Zealand.
“Despite positive economic conditions, companies continue to seek cost savings in travel, and we anticipate continued scrutiny in areas such as trip length, moving bookings online, hotel consolidation, and advanced bookings,” added Sully.
Despite the recent economic progress made in many global marketplaces, an element of caution remains in some quarters. Geopolitical instability combined with moves by some governments towards more protectionist economic policies has generated an undercurrent of uncertainty in the business community.
APAC Airfare and Hotel Forecast
| | Domestic Economy | International Business | Hotel | |
| Australia | 2.5% | 1.0% | 4.5% | |
| China | 1.5% | 0.75% | 2.7% | |
| India | 0.5% | 1.5% | 3.9% | |
| Japan | 0.5% | 0.0% | 2.2% | |
| Singapore | 0.0% | 0.75% | 0.0% | |
Source: Global Business Travel Forecast 2018 by American Express Global Business Travel
Key factors
Strong growing economies across much of the Asia-Pacific region and a burgeoning middle-class are causing demand for travel to surge. However, China remains a key driver of this growth and a slowdown of its economy could have a ripple effect throughout the region.
Air and Rail Travel
Airfares will remain relatively stable compared to 2017, as political stability and strong demand in China and India, is counterbalanced by widespread overcapacity and flatter demand in Japan and Australia.
Despite strong increases in demand, fares are expected to remain stable across Asia as airlines continue to chase business and new capacity floods the region. Domestically, demand has been growing at nearly 9%, with China and India seeing double-digit increases in RPKs in 2017.
While this will likely slow in 2018, rapidly growing economies in both countries, an expanding middle-class, and favourable government policies should ensure demand remains strong throughout the region, even with relatively flat growth in Japan and Australia.
Domestic carriers in China will also have to compete with the world’s fast-developing high-speed rail network, which accounts for more than two-thirds of the world’s capacity and is expected to grow another 50 percent by 2020.
Accommodation
Hotel rates in the region will generally increase as growing business confidence and a thriving tourism sector drive up demand, although this will vary considerably by country. South Korea is the only nation expected to see rate decreases, largely as a result of China’s tourism ban.
Overview
Rising demand from travellers in Asia, notably from India and China, are changing travel dynamics in the region and putting a strain on availability in popular locations like Singapore, Hong Kong, Sydney, Tokyo, and Bangkok.
However, the rapid development of new inventory is generally keeping pace with this demand and the region remains favourable to buyers in most locations. Overall, room rates should continue to increase moderately through 2018, although this will vary city by city.