Source: Hotel News Resource
Travel Prices Set to Marginally Increase or Remain Flat for 2017; Geopolitical and Economic Uncertainty Mean Travel Managers Need to Remain Flexible and Agile
New research out today highlights six key risks heading into 2017 that could impact both travel industry prices and the global economy as a whole. They are emerging market performance, financial market turbulence, geopolitical risks, uncertainty surrounding Brexit, potentially fluctuating U.S. interest rates and oil prices.
“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 programs,” 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 programs will be watching and reacting to an ever-changing global landscape.”
These findings come from the 2017 Global Travel Price Outlook, 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). The third annual report provides global, regional and country-by-country projections for air travel, hotel, ground transportation and meetings and events prices in 2017.
Kurt Ekert, President and Chief Executive Officer of CWT, said, “We are seeing relatively low, inconsistent and in some cases fragile economic growth. Travelers 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.”
Airline prices are projected to increase only slightly (2.5 percent) 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 percent of global airline revenue in 2015, up from 6.7 percent in 2014 and that trend is set to continue.
- Asia Pacific, while projected to experience a 1.1 percent 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 is a mixed bag. It is anticipated that Eastern Europe will see a 4 percent increase in prices due in part to limited competition prices in Western Europe prices are expected to increase by 0.5 percent and in Middle East and Africa by 2 percent.
- Latin American and the Caribbean are expected to experience a 1.9 percent decrease in prices.
- In North America fares are projected to increase 3.7 percent. Carriers are expected to reinvest some of the profits enabled by low fuel prices to purchase new aircraft and improve their product.
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 travelers. Traditional hotels, therefore, remain an attractive option for business travelers, despite the sharing economy options.
- Asia Pacific is expected to see hotel prices fall slightly, by 0.6 percent.
- 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 percent, Western Europe prices will increase 1.8 percent, and Middle East and Africa rates will fall slightly, by 0.5 percent.
- Prices in Latin America and the Caribbean are projected to decrease by 0.9 percent.
- Overall, North American hotel prices are expected to rise by 4.0 percent 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. Meanwhile, 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.
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 percent.
- EMEA is projected to remain flat across the board, with a very slight 0.1 percent decrease expected in Western Europe.
- LATAM prices will edge forward by 0.5 percent.
- Prices in North America are expected to remain flat in 2017.
Meetings & Events
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 percent range for Asia Pacific, Europe and North America, while remaining flat in Latin America.
The full report is available here.