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Business travel costs to rise in 2020


SINGAPORE, 23 September 2019: Global hotel rates will increase by 1% to 3% and airfares by 1% to 2% in 2020, according to leading business travel management company BCD Travel’s newly released 2020 Industry Forecast.

The increase in global hotel prices is being driven by solid demand, keeping occupancy high in most regions. Rate increases will be higher in Asia — particularly Japan, host of the 2020 Summer Olympics, and Vietnam, where both leisure and business travel demand is strong.

Meanwhile, airlines will raise average fares in most markets to help offset higher fuel and labour costs. Globally, average ticket prices are expected to rise between 1% and 2% in 2020.

The latest edition of BCD Travel’s annual report on what’s ahead for business travel also analyses individual regions. Among the findings:

Report standouts

Hotel rates in North America will climb 2% to 4% in the US and Canada, and 0% to 2% in Mexico.

Hotels will keep adding new properties in Asia, but demand will continue to outstrip supply. Rates will rise by 2% to 4%.

Strong demand in Europe will push meetings costs up 3% to 4%.

Meetings costs also will increase sharply in Sydney and Auckland, New Zealand.

Regional airfares will rise by 3% in Latin America as demand recovers.

Airfares will rise 1% to 2% on regional routes in Africa, with higher increases on flights between the continent’s fastest-growing economies.

Uber’s bid to buy Careem could create a dominant ride-hailing force in the Middle East.

“As we approach 2020, corporate travel buyers face the prospect of a slowdown in advanced economies, while the performance of emerging markets improves,” said, BCD Travel director of research & intelligence Mike Eggleton. “We believe this will restore the traditional growth gap that had recently narrowed between mature and emerging markets.”

As an example, Eggleton cited BCD’s assumption that the North American economy would expand by 1.6% while Asian growth would be much stronger, possibly as high as 4.5%.

Slower global economic expansion has resulted in weaker growth in demand for air travel year over year. Despite this, demand will be strong enough for airlines to raise fares in most markets to help offset higher fuel and labour costs. Air capacity expansion will limit fare increases—with some exceptions. In China and India, strong demand, competitive changes and regulatory developments will lead to higher fares.

Globally, average air ticket prices for intercontinental travel in both business and economy classes are expected to rise by 1% in 2020. Intercontinental business class fares will be flat in Latin America and will fall 1% in Southwest Pacific, where increased competition on transpacific routes will drive down prices.

In 2020, economy fares for regional flights are expected to rise by 1%, while business class fares will increase by 2%. Average ticket price increases will range 1% to 3% across the regions. The sharpest increase, at 3%, will be for flights within Asia and Latin America as demand recovers. In Europe, regional economy fares should remain flat because of low-cost carrier competition.

Hotel demand will boost occupancy rates in 2020, resulting in average daily rates (ADRs) increasing by 1% to 3%. Asia will see hotel rate increases averaging 2% to 4% as demand outpaces supply. Latin America will have the lowest ADR increase at 0% to 2%, as demand in the region slowly recovers from a period of weakness.

The 2020 Industry Forecast provides travel and procurement managers with projected prices, insights and guidance to prepare for new sourcing strategies, supplier negotiations and budgeting. In addition to providing global supply, demand and pricing trends for the air, hotel, ground transportation and meetings categories, the Industry Forecast includes in-depth reports on Africa, Asia, Europe, Latin America, the Middle East, North America and Southwest Pacific.

(Source: BCD)

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