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Published on : Thursday, July 14, 2016
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.
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.
An intensely competitive climate will dictate continued flat pricing for the global ground transportation sector.
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.