American Express GBT forecasts subdued growth, moderate price increases for biz travel

Following an “uneven” year within the business travel sector, American Express Global Business Travel is forecasting a similar outlook for 2017, citing factors such as depressed oil prices, the looming ‘Brexit’ and increased security concerns in several countries.

According to American Express GBT’s Global Business Travel Forecast 2017, the coming year will see “flat to moderate rate increases expected globally across air, hotel and ground transportation.

“The continued slowdown of the Chinese economy and depressed oil prices, the United Kingdom’s impending departure from the European Union, growing populist politics and increased security concerns in many countries have together created a higher level of uncertainty in the global marketplace. It remains to be seen how this will impact business travel over the next year,” read a statement from American Express GBT.

Additional global highlights include:

• Air: Global demand for air travel remains at a record high; persistently low fuel prices and strong competition will help keep airline fares in check.
• Hotel: Hotel performance will improve moderately and prices will remain flat in most regions with the exception of Latin America, where rates will decline slightly, and Asia Pacific, where the impact varies greatly by country.
• Ground: Ground transportation has undoubtedly felt the impact of new industry players and rates should remain flat as capacity continues to exceed demand.

In North America, overcapacity and fierce competition between legacy carriers and low-cost carriers on heavily travelled routes are leading to anticipated fare decreases. However, lower fares will be offset by higher ancillary fees as airlines continue to look for new sources of revenue, the release stated. With significant new supply coming online in the United States, only moderate increases are projected, as inventory remains steady with demand. Rates will increase slightly in most of Canada due to an increase in demand linked to the weak Canadian dollar.

Rodolfo Elizondo, vice-president and head of global business consulting at American Express GBT, believes that in this period of political and economic uncertainty, companies and business leaders will welcome news that the cost of business travel may, at worst, endure only modest increases. “Travel managers should focus on the things they can control, like demand management, compliance and traveller satisfaction to reduce risk and increase savings,” he said.