Travel price increases to be smaller in 2013

25 July 2012

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25 July 2012 | Kamalpreet Badasha

Business travel prices will not rise as much next year as they did in 2012, as prices in Latin America and Asia Pacific stabilise while economic uncertainty in Europe weakens any increases.

According to a forecast by Carlson Wagonlit Travel (CWT), the entry of low-cost carriers into the Asia Pacific market will dampen price rises to 2.5 per cent. Average daily hotel rates in the region will also increase, with Singapore seeing the highest increase of 8 per cent. Car rental rates will see the biggest global rise, up by 5.9 per cent.

The newly formed LATAM Airlines – formed by the merger between Chile’s LAN Airlines and Brazil’s TAM Airlines - is expected to boost the number of routes to Latin America. Ticket prices in this region will increase by 1.3 per cent as healthy economies such as Chile and Brazil are offset by weaker markets such as Colombia and Mexico.

Latin America is predicted to see average daily hotel rates go up by approximately 6.3 per cent with Brazil experiencing double-digit growth, attributed to strong demand. But the construction of extra hotels in advance of the 2014 FIFA World Cup and 2016 Olympic Games in Rio should add extra capacity. The region is also expected to experience the highest increases in per attendee per day spending for meetings and events with average increases of 11 per cent.

North America will see airline prices increase by 2.8 per cent. Western Canada is expected to see an increase in demand for accommodation due to the mining and energy resources in the area. Overall the average hotel daily rate for the region will go up by 3.2 per cent.

Economic uncertainty in Europe is balanced by the positive growth in the Middle East and Africa. Airfares across the region will increase by 2.5 per cent as airlines implement capacity controls. There will be only a moderate increase in average daily hotel rates of 1.3 per cent. High-speed rail rates will see the greatest increase, with prices going up by 4.3 per cent. The increase was attributed to the use of the transport as an alternative to air travel.

“Our forecast demonstrates there is still plenty travel buyers can do to watch costs and take care of travellers through other measures, including re-examining how they influence traveller behaviour," said Nick Vournakis, senior vice president, global product marketing at CWT.

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