Strength in Global Economy Means Higher Travel Pricing in 2018

Published on : Wednesday, July 19, 2017

Carlson Wagonlit TravelAccording to the 2018 Global Travel Forecast, travel prices are expected to rise sharply in the coming year, reaching nearly 4 percent increases in some sectors. Released today, the fourth annual forecast, by the GBTA Foundation in partnership with Carlson Wagonlit Travel, and with the support of the Carlson Family Foundation, shows global airfares are expected to rise 3.5 percent in 2018; hotel prices are expected to be 3.7 percent higher; and ground transportation such as taxis, trains and buses are expected to rise only 0.6 percent – significantly less than the 3 percent inflation forecast for 2018.

 

“Geopolitical risks, uncertainties in emerging markets and ever-changing political environments in Europe and the United States mean today’s travel professionals have more than ever to take into account when building their travel programs,” said Jeanne Liu, GBTA Foundation vice president of research.  “The most successful programs will have to keep a watchful eye on both geopolitical risks and a rapidly-changing supplier landscape as they reevaluate strategy often and adapt as necessary.”

“The higher pricing is a reflection of the stronger economy and growing demand,” said Kurt Ekert, president and CEO, Carlson Wagonlit Travel. “The global numbers from this forecast should be considered strong leading indicators of what 2018 will mean for global businesses, as we anticipate higher spending.”

2018 Air Projections

The rise in global airfares comes as crude oil prices rise, in spite of airlines adding an expected 6 percent capacity in 2018. Complicating airline pricing is increased segmentation of basic fares among large carriers, as travelers now have the option of choosing a basic economy, restricted fare versus various upgraded fares, with specific service options and pricing varying by airline.

 

 

 

 

 

 

2018 Hotel Projections

Globally, the 3.7 percent average increase in hotel prices masks what is actually happening on a regional level. Europe is expected to post strong increases, while other regions are barely keeping up with inflation. Additionally, prices are expected to fall in Latin America and the Caribbean. We expect the impact of the 2017 mergers will be felt during the 2018 RFP season.

 

Suppliers are progressively moving corporate buyers away from fixed, negotiated hotel rates and toward dynamic rate pricing. There is also a global trend towards “smarter” hotels, with hotels investing in beacon technologies, messaging, in-room entertainment and more. Increasingly tech-savvy guests will use apps to check in and out, unlock their hotel room door, operate the television remotely and control room temperature.

 

 

 

Revenue per available room growth is expected for most major cities across Europe in 2018, with Porto and Budapest leading the pack. With its halt on hotel construction, Barcelona may join the top five cities for occupancy rates, while Amsterdam has implemented a “hotel stop” policy to limit new hotel development. Dublin is increasing supply through 2020. There has been a large increase in upscale hotel transactions in the United Arab Emirates as oil prices start rising again. Use of sharing economy players will remain limited as governments tighten control.

 

 

 

2018 Ground Transportation Projections

Ground transportation pricing is expected to rise only 0.6 percent in 2018 (but 5.5 percent by 2022). Industry experts predict record new car sales over the next five years, pushing up per unit fleet costs, while used car pricing is expected to fall 50 percent, hurting residual value for used rental cars and making current rental car pricing unsustainable. Market-specific regulations for curbing emissions, and rising oil prices have suppliers’ already increasing availability of “green” rental cars.

 

Sharing economy players such as Uber and Lyft are expected to continue double-digit growth upwards of 10 percent in 2018, before settling down into single-digit growth for 2019. Their growth is under threat by costly regulation and government bans.

 

 

 

 

 

 

Source:- Carlson Wagonlit Travel

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