Bigger travel budgets needed

7 September 2018

The growing global economy and a measured hike in oil prices will see prices rise across Asia, North America and Europe

Travel prices are forecast to rise next year, with flights increasing on average by 2.6% and hotels by 3.7%, driven by global economic growth and rising oil prices, according to the 2019 Global Travel Forecast by Global Business Travel Association (GBTA) and Carlson Wagonlit Travel (CWT).

Competition will also add to airline costs, with a shortage of pilots, potential trade wars, and greater fare segmentation, which will see premium economy and basic economy seats reduced as carriers look to improve margins.

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The recent introduction of ultra-long-haul flights will have some effect on the sector. There are now three times more in service than a decade ago, thanks to increasingly sophisticated aircraft flying lighter, further and faster, says the report, and 2019 will prove their success or failure.

Other factors include increasing competition from low-cost carriers, including in long-haul flights business. A push towards New Distribution Capability, a data standard that enhances airline communication with travel management firms, will also have an impact. 

Across Asia Pacific, airfare prices are expected to rise 3.2%. Notable rises will be seen in China (3.9%) New Zealand (7.5%) and India (7.3%). Japan is the exception with prices set to fall -3.9% as it adds capacity ahead of the 2020 Olympics.

In Western Europe prices are expected to increase 4.8% in 2019, with “especially pronounced” increases in Norway (11.5%), France (6.9%) and Spain (6.7%). Eastern Europe and MENA, however, will see declines of 2.3% and 2% respectively.

Latin America is expected to see a drop of 2% in 2019, but Mexico, Colombia and Chile will see rises of 0.1%, 1.2% and 7.5% respectively. North America is expected to see a modest rise of 1.8%.

Mobile bookings for beds 

The overall increase in air travel is expected to fuel demand for rooms, causing price increases in the hotel industry. An increase in demand for mobile bookings and travel apps will also have some effect, as well as developments in personalised guest experiences.

In Asia Pacific the rises are expected to reach 5.1%, and again, New Zealand will see higher than average price rises (11.8%). Japan will be the exception again, says the report, with prices expected to fall 3.2%.

Hotel prices in Europe and MENA are expected to mirror air fares. Western Europe will see an overall increase of 5.6%, with Norway the steepest (11.8%), followed by Spain (8.5%), Finland (7.1%), and France and Germany (both 6.8%).

Prices are expected to decline 1.9% in Eastern Europe and 1.5% in MENA.

Accommodation across Latin America will fall 1.3%, with declines in Argentina (-3.5%), Venezuela (-3.4%), Brazil (-1.9%) and Colombia (-0.7%). Exceptions include increases for Chile (6.4%), Peru (2.1%) and Mexico (0.6%).

North American hotel prices are set to rise 2.1%, including a 5% increase in Canada and 2.7% in the US.

Ground transport

This sector shows a stability in prices, as rental companies join ride-hailing apps rather than challenge their growing popularity, with some offering their older vehicles to ride-hailing drivers for competitive rates. Only North America shows an increase, largely through Canada, which is expected to experience inflationary pressures. The report notes that the rental firms will make an effort to raise prices by the fourth quarter – as much as 6% in the US – as maintenance costs rise and used vehicle values drop. 

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