Report predicts travel pricing for 2016

The Global Business Travel Association (GBTA), and Carlson Wagonlit Travel (CWT), have released a report providing global, regional and country-by-country projections for air travel, hotel, ground transportation and meetings & events prices in 2016.

The 2016 Global Travel Price Outlook identifies six hot spots – India, China, Colombia, Mexico, Singapore and Australia — where increased business travel demand is driving significant air price increases. This is despite global air travel prices displaying signs that they will be essentially flat in 2016.

According to the report, the top-line pricing outlook for air, hotel and ground in 2016 is stable, but indicates global hot spots where demand is driving air travel price increases - with India, China, Colombia, Mexico, Singapore and Australia projected to top the list for 2016.

AIR

Airline prices are set to be nearly flat on a global basis due to significantly lower energy prices, steady increases in capacity and stable demand. Regionally, the report projects:

• Asia Pacific and Latin America – small price increases (1.2 per cent and 0.8 per cent respectively).
• In Europe, Middle East and Africa, prices will see a small increase (0.4 per cent).
• In North America, (0.5 per cent) – with the U.S. slightly up (0.5 per cent) and Canada sharply down (-5 per cent).

Yet, global and regional numbers reveal only part of the picture. There are six countries that are seeing projected price increases as a result of higher demand, including:

• Colombia - by three per cent, caused by a rapidly growing middle class and relatively stable economy, which are driving demand while capacity has grown at a modest rate.
• Mexico - by three per cent, driven by strong domestic and international demand.
• Singapore - by three per cent, driven by lower energy prices and less restrictive monetary policy that will fuel demand.
• India - by 2.6 per cent, driven by spiking business and consumer confidence.
• China – by 2.8 per cent, bolstered by domestic demand and strong demand despite slowing economic growth and business travel volume.
• Australia - by 2.7 per cent, as improving business conditions will boost domestic air travel.

Venezuela is also projected to see a 6.3 per cent increase, caused by high inflation, the drop in oil prices and a currency fixed to the U.S. dollar.

HOTEL

Globally, 2016 will show an increase in hotel prices because demand is overtaking supply in every major global region: 

• Asia Pacific will see hotel prices rise by three per cent – led by Singapore, Japan and Australia.
• In Europe, Middle East and Africa, hotel prices will see a moderate increase at 1.8 per cent, although many European countries will experience price increases in local currency due to exchange rates with the U.S. dollar. Prices in Russia will rise significantly due to the impacts of the drop in oil prices and sanctions on its economy.
• In Latin America, prices will rise – 3.7 per cent – due to high inflation in some nations, particularly Venezuela and Brazil.
• In North America, high demand will increase rates by 4.3 per cent, driven by economic activity in the Bay Area, Los Angeles and other major U.S. cities.

GROUND

Car rental pricing has been under pressure for a number of years. Demand isn’t rising sharply enough, and fleets are not being managed tightly enough, leading to stagnant rates globally and regionally. According to the report, there is a global trend revolving around the sharing economy. While the report does not predict a significant impact on traditional car rentals globally, there may be an impact to rental car companies’ car share and sedan/black car segments.

MEETINGS & EVENTS

Across the globe, only modest increases are expected in cost per attendee per day and group size, with the exception of Asia Pacific which will see a five per cent increase in cost and an 11 per cent increase in group size. Strong demand from China and India is the major driver for the region’s increasing cost and group sizes. North America will also see a 4.5 per cent cost per attendee per day increase, with food and beverage pressures continuing to be a significant driver of costs.

The full report is available to GBTA members here, and non-members may access the report here.