SINGAPORE, 17 August 2023: Global business travel and events costs are set to climb higher through the remainder of 2023 and into 2024, albeit at a much more moderate pace than the exceptionally steep increases seen in 2022.
That’s the standout observation of the 2024 Global Business Travel Forecast, published earlier this week by CWT, the business travel and meetings specialist, and the Global Business Travel Association (GBTA), the world’s largest business travel trade organisation.
Rising fuel prices, labour shortages, and supply chain challenges, coupled with red-hot demand, caused travel prices to skyrocket in 2022 – far surpassing some of the increases outlined in last year’s forecast.
Lingering economic uncertainty and a gradual easing of supply-side constraints are expected to result in more subdued price increases over the next 12 to 18 months, according to the report, which uses anonymised data generated by CWT and GBTA, with publicly available industry information and econometric and statistical modelling developed by the Avrio Institute.
“A potent combination of demand and supply-side pressures propelled travel prices higher than expected last year,” said CWT chief executive officer Patrick Andersen. “Prices seem to level off with much milder increases projected over the next 12 to 18 months. We could now be looking at the true net cost of travel.”
“As this research outlines, it’s clear that rising costs and pricing pressures will likely continue to be a significant factor in business travel for the foreseeable future. And as we experienced over the past few years, we may also continue to see different pricing fluctuations across industry verticals, business sectors and global regions. While business travel continues to rebound, there will be a continuing balancing act among demand, cost, and ESG concerns,” said GBTA. chief executive officer Suzanne Neufang.
Airline fares
The global average ticket price (ATP) of flights booked for business travel rose dramatically in 2022, experiencing record price increases. The ATP rose by 72.2% YoY to USD749 in 2022, far surpassing 2019 levels (USD670). While demand has recovered strongly, with passenger numbers quickly approaching pre-pandemic levels, driven primarily by pent-up leisure travel demand, airline capacity continues to be constrained by labour shortages and supply chain issues. Looking forward, ATP growth is likely to be more modest at 2.3% in 2023 and 1.8% in 2024, albeit from an already high base. Still, many corporate buyers now have less leverage to negotiate with airlines, as their travel volumes remain below pre-pandemic levels.
At USD855, the Europe, Middle East, and Africa (EMEA) region recorded the highest ATP in 2022, compared to other parts of the world. This represents a 31.5% increase from 2021. More modest price increases are expected going forward, with ATPs predicted to rise 2.9% this year and 2.2% in 2024.
However, in terms of year-over-year growth, the ATP in Asia Pacific climbed 148.7% YoY in 2022 to USD567 – the biggest increase seen in any region, despite China’s lack of international travel demand. Key business travel destinations, including Australia and Japan, fully reopened to vaccinated travellers and resumed visa exemption arrangements. Average airfares rose 75.3% for Australia and 79.3% for Japan in 2022, with a sharp rise in the share of long-haul tickets. As airlines in the region – particularly the major carriers from China – continue to add more international route capacity, the increased supply should help ease price pressures in the region, with ATPs forecast to rise 4.8% in 2023 and 2.7% in 2024.
Hotels
Like air travel ATPs, the global average daily rate (ADR) for hotel bookings exceeded earlier predictions, rising 29.8% YoY to USD161 in 2022. Occupancy rates have been high, along with labour, energy and food and beverage costs. Several cities worldwide, including London, Miami, and Singapore, reported their highest ADRs on record in 2022. ADRs are projected to climb a further 4.3% in 2023 to USD168, followed by a 3.6% increase to USD174 in 2024.
Ground transport
Car rental supply has been constricted as companies sold vehicles during the pandemic when demand collapsed. As business returned, vehicles were not replaced at pace due to supply chain issues, largely due to a worldwide shortage of vehicle semiconductors, leading to inflated vehicle prices. These factors have contributed to prices rising by 9.8% YoY in 2022, with a further 6.7% increase forecast this year. Pricing growth is expected to cool to 2.1% in 2024.
Meetings and events
In-person meetings and events have rebounded more robustly than many had expected. Client acquisition and relationship building are key business goals that are not easily executed virtually. There has also been a robust demand for incentive trips as companies seek to motivate and reward employees. CWT Meetings & Events has observed these trips becoming longer and more frequent and expects the trend to continue.
The average daily cost per attendee was USD160 in 2022. This is expected to increase to USD169 in 2023 and then USD174 in 2024.
Lead times for events remain short in this post-pandemic world. However, organisers should now look at 2024 with a 12-month planning cycle if they want to keep prices reasonable. At the same time, consolidating transient travel and M&E spending can give buyers more leverage when it comes to negotiating pricing.
For more detailed information, including regional breakdowns and in-depth insights and analysis on these pricing trends, please view the full report online or download a PDF version here.
About the 2024 Global Business Travel Forecast
The figures in this report are based on data from more than 70 million ticketed flights, over 125 million hotel room night bookings and more than 30 million car hires covering data from 2018 to the present.
About GBTA
The Global Business Travel Association (GBTA) is the world’s premier business travel and meetings trade organisation headquartered in Washington DC, serving stakeholders across six continents. GBTA and its 7,600+ members represent and advocate for the USD1.158 trillion* global business travel and meetings industry.
About CWT
CWT is a global business travel and meetings specialist owned through funds managed by leading global financial institutions, including Barings, MacKay Shields, and Monarch Alternative Capital.
