Country-specific economic trends to effect business travel in 2014

Country-specific, rather than global, economic trends are expected to contribute to a “slight” uptick in business travel prices within specific regions. This is a key finding of the latest American Express (AMEX) Global Business Travel Forecast 2014, which notes subdued global economic growth is not likely to impact business travel demand.

It also indicates supply-side dynamics, including more low-cost carrier options, weaker demand for business class air travel due to more stringent corporate policies, and lack of new hotel construction, or oversupply in some areas, across specific regions are all factors expected to have a greater impact on pricing changes.

The forecast provides subscribers with 2,100 pricing predictions across airfares, hotel rates, and car rental rates in the Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific (APAC), as well as related travel management programme recommendations.

“In the UK, business travel rates are predicted to rise modestly, with low- and mid-single digit increases across air, hotel and ground transport,” says Director of Global Business Consulting at American Express Global Business Travel, Sebastien Marchon (pictured). “Looking at the air category, the UK’s finance sector has largely bypassed the challenges of the major EU countries, contributing to the demand for short- and long-haul business traffic.

“From a supplier perspective, low-cost carriers continue to put pressure on short-haul prices and companies now see low-cost carriers as a natural choice for shorter routes. However, legacy carriers on long-haul routes are building alliances to reduce the number of transatlantic competitors, so long-haul economy and business fares are likely to increase more.”

In response to these observations, the forecast predicts that UK short-haul business class fares are predicted to decrease by up to two per cent, whereas UK short-haul economy fares are predicted to see potential increases of up to 2.5 per cent. Long-haul fares in the UK are expected to see increases of up to four per cent.

The UK remains as vibrant a destination as ever and hotel use remains steady, particularly in London. The forecast predicts mid-level increases in 2014, up to five per cent for the mid-range hotels and up to 4.5 per cent for the upper-range hotels.

EMEA predictions and dynamics

Companies should expect to pay slightly more overall for business travel in EMEA in 2014, AMEX advices, as suppliers likely make adjustments across air, hotel and ground transportation categories, all of which are expected to remain relatively flat or experience slight increases in the region. In response to more competition from a strengthening rail industry, which is expected to improve its business class options, larger airlines are expected to follow the model of low-cost carriers.

Hotel rates are expected to increase in nearly all countries and categories in 2014, resulting in an overall prediction of increases in both mid-range and upper-range categories for EMEA. Germany, which boasts one of the stronger economies in the EU, is also expected to see relatively higher increases in hotel prices in 2014.

Rail travel in Europe can be preferred by business travellers for intra-European trips. European car rental suppliers will likely adjust to price sensitivity and traveller needs by offering a number of alternatives to traditional daily car rentals, including car-sharing options and introducing their lower-cost rental brands.

Outside of Europe, airlines in the United Arab Emirates, which has maintained steady economic growth, are expected to add capacity and new global destinations, likely causing short- and long-haul business fares to decline. Hotel prices are expected to rise in the United Arab Emirates, even with growing supply, as the region remains an attractive business destination. Although the United Arab Emirates continues to be a developing country for rental cars, rates are expected to increase due to communication campaigns and websites now in local languages.

Americas predictions and dynamics

North America

Overall, North American business travellers can likely expect mixed price changes across travel categories in 2014. With minor exceptions, North American airfares are expected to decline in 2014 as a result of heightened competition from low-cost carriers, challenging unemployment levels and corporate travel policies becoming more stringent in regard to business class travel. However, pending consolidation among major US airlines may offset these expected declines.

Predicted hotel rates in North America are expected to be up overall, however the predictions for individual cities are expected to vary widely. Hotel prices in North America’s main travel regions – key business and tourism destinations such as New York and Toronto – will likely continue to grow, but it appears that secondary locations have become saturated with supply and are expected to be more competitive.

Consolidation continues in the North American ground transportation industry and car manufacturers are expected to increase prices on their fleet. Car rental companies may pass the higher costs on to their customers, which may result in moderate price increases in car rental base rates. Key suppliers are also exploring car-sharing programmes in specific regions as an alternative that can offer increased flexibility and lower costs for corporate clients compared to public transportation.

Latin America

As Latin America’s larger economies slow down after a period of growth, changes in airfare and hotel rates are likely to vary country-to-country. Local economies in Argentina, Brazil and Chile are expected to have the greatest impact on business travel costs in the region in 2014.

Demand from U.S. companies with manufacturing facilities in Latin America will likely help create a seller’s market and contribute to mid- and upper-range property increases. Brazil is expected to continue to lead in occupancy levels, and in preparation for the football World Cup taking place in 2014, may also experience additional increases in hotel rates next year.

In the ground transportation category, rising demand is likely to translate into base rate increases, especially as activity from multi-national companies and new hotel construction increases in the region.

APAC predictions and dynamics

Driven by China’s slower but stabilising growth, APAC will likely see rate increases across most categories. Individual country predictions tend to be positive as well; however, as is the case in other regions, considerable variability across the region is expected.

Hotel rates across the APAC region are expected to see rate increases, as the region continues to grow economically and supply is not expected to outstrip demand in most locations. The exception is India, which may experience slight declines.

Car rental prices are expected to increase slightly due to expected growth within the region. However, across APAC, chauffeurs and public transportation, including trains, will likely continue to be more popular and practical for local transportation in most cases.

This year marks the 10th anniversary of the American Express Global Business Travel Forecast. The forecast is based on a number of primary data sources, including proprietary data from the American Express Business Travel Monitor, the American Express contracted rates database, aggregate transaction data, and secondary data sources including Smith Travel Research (STR) Global Hotel Reviews, Center for Asia Pacific Aviation (CAPA), Airline Weekly and economic data projects from

American Express Global Business Travel is part of one of the world’s largest travel agency networks with locations in 138 countries worldwide.

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Paul Colston


Paul Colston

Managing Editor, Conference News & Conference & Meetings World.

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