The combined effects of escalating trade wars, the impact of Brexit, possible oil supply shocks, and the growing likelihood of recession are set to slow global airfares and hotel rates in 2020, according to the sixth annual Global Travel Forecast, published by the Global Business Travel Association (GBTA) and Carlson Wagonlit Travel (CWT)
After posting sharp rises in 2019, prices in the global travel industry are projected to slow in 2020, with flights rising a modest 1.2 per cent, hotels rising only 1.3 per cent, and rental car rates up one per cent.
While the global economy is doing well overall – and expected to grow a solid 3.6 per cent in 2020 – a raft of uncertainties are set to put a damper on pricing.
Scott Solombrino, GBTA COO and executive director, said: “Technological advancements and an increasingly volatile economic and political landscape across the globe have changed the way today’s travel buyers need to do their jobs. This annual forecast provides insights into the key drivers forcing these shifting priorities and gives a road map for travel buyers looking to plan their 2020 travel programs.”
Asia’s expansion has slowed down due to worsening US-China relations, tighter global financial conditions and natural disasters. But the region remains the most dynamic, with steady GDP growth, benign inflation and a sense of optimism, the report added.
In Asia-Pacific, the shutdown of India-based Jet Airways’ operations in April created a gap in the market for some key routes, and the reduced competition has meant higher airfares. But with other airlines adding capacity to fill the vacuum, fares have begun to normalise.
Meanwhile, Asia’s hospitality industry is booming with hotel investment volumes predicted to grow 15 per cent year-on-year. Japan will host the Rugby World Cup later this year, and the Olympic and Paralympic Games in 2020, which will boost visitor numbers to the region. The Japanese hotel market is seeing a sharp increase in supply to accommodate the anticipated surge in visitors to the country during these events.
In China, steady demand and increased competition will hurt car suppliers. Across Asia-Pacific, ride-sharing is booming, with many companies allowing their employees to use these services for business travel. Providers like Didi Chuxing, Grab, Go-Jek and Ola are pursuing aggressive expansion plans, while taking steps to put more stringent safety measures in place.