US and Asia to see price rises for flights and hotels

Gurjit Degun
26 February 2014

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26 February 2014 | Gurjit Degun

Airfares on US airlines are set to increase this year with constraints on capacity and carriers showing discipline on pricing.

TCG Consulting’s 2014 Global Air & Hotel Forecasts added the “upward pressure on fares and spend” is also because the American Airlines/US Airways merger is moving forward.

“In addition, as the US economy continues to improve, and companies accelerate their hiring, we also anticipate increases in overall business travel spend, which will also put upward pressure on pricing,” said Barry Rogers, TCG global air practice leader.

In Asia, flights in China will see an increase in volume and pressure on fares. “While the Chinese economy has begun to stumble, growth in the 7 per cent range will continue to drive increases in travel volume in that market, and put upward pressure on fares,” said Rogers. “However, the wars between Qantas and its various competitors in Australia will likely hold prices down in those markets.”

TCG added that the European economy is beginning to stabilise, and companies have continued the move from business class to economy class for travel within the continent.

Fares to Brazil will be affected, particularly in the summer, because of the Fifa World Cup football tournament, said Rogers.

In terms of hotel rates, TCG global hotel and meetings director Desiree French said the North American market will continue to see “solid rate increases” due to a “broad economic growth driving increased corporate travel demand”.

Occupancy remains high across the Asia Pacific region, the report said, and there will be a continued rises in rates, “with some cities seeing high single digit increases”. French explained the World Cup in Brazil will also “create a ripple effect” in South America during the summer.

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