Travel prices are set to increase marginally or remain flat for 2017, while geopolitical and economic uncertainty mean travel managers need to remain flexible and agile.
These are among the findings in the 2017 Global Travel Price Outlook, which identified six key risks that could impact both travel industry prices and the global economy as a whole heading into 2017.
They are emerging market performance, financial market turbulence, geopolitical risks, uncertainty surrounding Brexit, potentially fluctuating U.S. interest rates and oil prices.
The findings in this annual report are research from the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA), and leading travel management company Carlson Wagonlit Travel (CWT).
Travel buyers have to be more nimble and flexible in crafting travel programmes. (image credit:Rawpixel-Ltd/iStock)
“While business travel repeatedly demonstrates its resilience, the high level of global uncertainty we face heading into 2017 means travel buyers have to be more nimble and flexible than ever in crafting travel programmes,” said Jeanne Liu, GBTA Foundation vice president for research.
“The outlook shows only marginal increases or flat travel prices, but for 2017 the key to building successful travel programmes will be watching and reacting to an ever-changing global landscape.”
Kurt Ekert, president and chief executive officer of CWT, noted that there is relatively low, inconsistent and, in some cases, fragile economic growth.
“Travellers and travel managers need to understand their travel patterns and spend, and be alert to the impact of economic uncertainty and volatility. Proper planning will put them in position to make changes when necessary, and to avoid downside financial risk.”
Below is a snapshot of the projections for air travel, hotel, ground transportation and meetings and events prices in 2017.
Air
Slight increase in air prices in 2017. (Image credit: annavaczi/iStock)
Airline prices are projected to increase only slightly (2.5%) in 2017, while fares may actually fall below 2015 levels in some markets due to continued low oil prices. Ancillary fees will have an increasing impact: they grew to 7.8% of global airline revenue in 2015, up from 6.7% in 2014 and that trend is set to continue.
- Asia Pacific, while projected to experience a 1.1% decrease in prices, is expected to remain mostly stable throughout 2017, helped by lower fuel prices. Japan and Singapore however, are expected to see a significant impact on airfare pricing given currency exchange rate projections.
- EMEA (Europe, the Middle East and Africa) is a mixed bag. It is anticipated that Eastern Europe will see a 4% increase in prices due in part to limited competition, prices in Western Europe prices are expected to increase by 0.5%, and in the Middle East and Africa by 2%.
- Latin American and the Caribbean are expected to experience a 1.9% decrease in prices.
- In North America fares are projected to increase 3.7%. Carriers are expected to reinvest some of the profits enabled by low fuel prices to purchase new aircraft and improve their product.
Hotel
Hotel services, such as room service, are important for corporate travellers. (Image credit: Stefano-Lunardi/iStock)
Mega hotel mergers are grabbing headlines, but their impact on prices likely won’t be felt until 2018. Hotel services such as room service, laundry and security remain important to corporate travellers. Traditional hotels, therefore, remain an attractive option for business travellers, despite the sharing economy options.
- Asia Pacific is expected to see hotel prices fall slightly, by 0.6%.
- EMEA again varies by region as geopolitical issues impact on hotel rates. Also, low oil and gas prices have decreased corporate travel for [the sector, primarily in the Middle East, Africa and Russia. It is anticipated that Eastern Europe prices will fall 2.4%, Western Europe prices will increase 1.8%, and Middle East and Africa rates will fall slightly by 0.5%.
- Prices in Latin America and the Caribbean are projected to decrease by 0.9%.
- Overall, North American hotel prices are expected to rise by 4.0% in 2017, but it will be a tale of two coasts. West Coast cities, including Seattle, Los Angeles, San Jose and Vancouver, will experience high single- to double-digit growth because of the high-tech boom and a shortage of hotel rooms. East Coast cities, including New York City and Toronto, as well as Canada’s oil and gas region, will face low growth or even a reduction because of an over-supply of hotel rooms.
Ground
Intense competition expected in ground transportation. (Image credit: train-m_71/iStock)
An intensely competitive climate will dictate continued flat pricing for the global ground transportation sector.
- Asia Pacific prices are expected to increase slightly, by 0.8%.
- EMEA is projected to remain flat across the board, with a very slight 0.1% decrease expected in Western Europe.
- Latin America prices will edge forward by 0.5%.
- Prices in North America are expected to remain flat in 2017.
Meetings & Events
No dramatic rise in fees for meeting & events. (Image credit: kasto80/iStock)
Modest increases in cost per attendee, per day for meetings and events are expected for Asia Pacific and North America. Europe is expected to remain flat and Latin America will see a decrease of 10 percent. Group sizes will increase marginally in the 3-6% range for Asia Pacific, Europe and North America while remaining flat in Latin America.
Download the full report here.
• Featured image credit: donskarpo/iStock
