Tepid increase expected for 2017 travel prices

travel-spend

TRAVEL prices are predicted to inflate only marginally next year as geopolitical and economic uncertainty weigh in.

Latest research by the Global Business Travel Association (GBTA) and Carlson Wagonlit Travel (CWT) reveal that emerging market performance, financial market turbulence, geopolitical risks, uncertainty surrounding Brexit, potentially fluctuating US interest rates and oil prices could impact the travel industry most.

“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.”

Airline prices are projected to increase only slightly, by 2.5 per cent, in 2017, while fares may actually fall below 2015 levels in some markets due to continued low oil prices.

Meanwhile, ancillaries will have an increasing impact. Its share of global airlines revenue has grown to 7.8 per cent in 2015, up from 6.7 per cent in 2014 with the trend set to continue.

On the hotel front, Asia-Pacific is expected to see prices fall slightly, by 0.6 per cent, while in Eastern Europe, prices will fall 2.4 per cent. Western Europe will see prices increase 1.8 per cent and Middle East and Africa rates will fall slightly, by 0.5 per cent. Overall, North American hotel prices are expected to rise by 4 per cent, largely due to an inventory crunch on the west coast.

Traditional hotels will remain a mainstay for corporate travellers over sharing economy providers due to the importance of room service, laundry and security. The study further expects the impact of mega hotel mergers on prices to be felt only in 2018.

In the MICE space, a modest increase 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 per cent.

Group sizes will increase marginally in the 3-6 per cent range for Asia-Pacific, Europe and North America, while remaining flat in Latin America.

“We are seeing relatively low, inconsistent and in some cases fragile economic growth,” said Kurt Ekert, president and CEO of CWT.

He advised: “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.”

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