Demand for air travel is driving air travel price increases, according to new research from the Global Business Travel Association (GBTA) and Carlson Wagonlit Travel (CWT).
India, China, Colombia, Mexico, Singapore and Australia are some of the hot spots where increased business travel demand is driving significant air price increases.
“Business travel is a leading indicator of global economic activity,” said Joseph Bates, GBTA Foundation vice-president of research.
“The top-line pricing outlook for air, hotel and ground in 2016 is surprisingly stable. But when you dig deeper, the data reveal global hot spots where demand is driving air travel price increases. For 2016, India, China, Colombia, Mexico, Singapore and Australia are projected to top the list.”
These findings come from the 2016 Global Travel Price Outlook, research from the GBTA Foundation and travel management company Carlson Wagonlit Travel (CWT).
The report provides global, regional and country-by-country projections for air travel, hotel, ground transportation and meetings and events prices in 2016.
“The data provides a compelling picture of a dynamic business travel industry,” said Christophe Renard, vice-president, CWT Solutions Group. “For cost-conscious travel managers, this outlook can help drive opportunities and cut costs to stretch every travel budget further.”
Airline prices are set to be nearly flat on a global basis due to significantly lower energy prices, steady increases in capacity and stable demand. Regionally, the report projects:
Asia Pacific and Latin America – small price increases (1.2% and 0.8% respectively).
In Europe, Middle East and Africa, prices will see a small increase (0.4%).
In North America, the US will be slightly up (0.5%) and Canada sharply down (-5%).
In Colombia, the rise is 3%, caused by a rapidly growing middle class and relatively stable economy, while Mexico is also project to see a 3% rise, driven by strong domestic and international demand.
In Singapore lower engery prices and less restrictive monetary policy, the survey says, will see rises of 3%, while a new business confidence in India will see a rise of around 2.6 percent, driven by spiking business and consumer confidence.
In China the rise is predicted to be 2.8%, bolstered by domestic demand and strong demand despite slowing economic growth and business travel volume.
In Australia a rise of 2.7% is predicted, as improving business conditions boost domestic air travel.
Next year will see an increase in hotel prices because demand is overtaking supply in every major global region, the report says:
Asia Pacific will see hotel prices rise by 3% — led by Singapore, Japan and Australia.
In Europe, Middle East and Africa, hotel prices will see a moderate increase at 1.8%, although many European countries will experience price increases in local currency due to exchange rates with the US dollar. Prices in Russia will rise significantly due to the impacts of the drop in oil prices and sanctions on its economy.
In Latin America, prices will rise— 3.7% — due to high inflation in some nations, particularly Venezuela and Brazil.
In North America, high demand will increase rates by 4.3%, driven by economic activity in the Bay Area, Los Angeles and other major US cities.
In the meetings and events sector the report predicts only modest increases in cost per attendee per day and group size, with the exception of Asia Pacific which will see a 5% increase in cost and an 11% increase in group size. Strong demand from China and India is the major driver for the region’s increasing cost and group sizes.
North America will also see a 4.5% cost per attendee per day increase, with food and beverage pressures continuing to be a significant driver of costs.