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Mon, 23 Sep 2019

Global Hotel Rates and Airfares to Increase in 2020

According to BCD Travels 2020 Industry Forecast, global hotel rates will increase by 1% to 3% and airfares by 1% to 2% in 2020.

The rate increases will be higher in Asia - particularly Japan, host of the 2020 Summer Olympics, and Vietnam, where both leisure and business travel demand is strong.

Airlines are also expected to raise their average fares in most markets to help offset higher fuel and labor costs. Globally, average ticket prices are expected to rise between 1% and 2% in 2020.

The latest edition of BCD Travels annual report on whats ahead for business travel also analyzes individual regions. Among the findings:

KLM Boeing 737 reg: PH-BXV. Picture by Steven Howard of TravelNewsAsia.com Click to enlarge.

- Hotel rates in North America will climb 2% to 4% in the U.S. and Canada, and 0% to 2% in Mexico.

- Hotels will keep adding new properties in Asia, but demand will continue to outstrip supply. Rates will rise by 2% to 4%.

- Strong demand in Europe will push meetings costs up 3% to 4%.

- Meetings costs also will increase sharply in Sydney and Auckland, New Zealand.

- Regional airfares will rise by 3% in Latin America as demand recovers.

- Airfares will rise 1% to 2% on regional routes in Africa, with higher increases on flights between the continents fastest-growing economies.

- Ubers bid to buy Careem could create a dominant ride-hailing force in the Middle East.

As we approach 2020, corporate travel buyers face the prospect of a slowdown in advanced economies, while the performance of emerging markets improves, said Mike Eggleton, director of Research & Intelligence for BCD Travel. We believe this will restore the traditional growth gap that had recently narrowed between mature and emerging markets.

As an example, Eggleton cited BCDs assumption that the North American economy will expand by 1.6% while Asian growth will be much stronger, possibly as high as 4.5%.

Slower global economic expansion has resulted in weaker growth in demand for air travel year-on-year. Despite this, demand will be strong enough for airlines to raise fares in most markets to help offset higher fuel and labor costs. Air capacity expansion will limit fare increases, with some exceptions. In China and India, strong demand, competitive changes and regulatory developments will lead to higher fares.

Globally, average air ticket prices for intercontinental travel in both business and economy classes are expected to rise 1% in 2020. Intercontinental business class fares will be flat in Latin America and will fall 1% in Southwest Pacific, where increased competition on transpacific routes will drive down prices.

In 2020, economy fares for regional flights are expected to rise by 1%, while business class fares will increase by 2%. Average ticket price increases will range 1% to 3% across the regions. The sharpest increase, at 3%, will be for flights within Asia and Latin America as demand recovers. In Europe, regional economy fares should remain flat because of low-cost carrier competition.

Hotel demand will boost occupancy rates in 2020, resulting in average daily rates (ADRs) increasing by 1% to 3%. Asia will see hotel rate increases averaging 2% to 4% as demand outpaces supply. Latin America will have the lowest ADR increase at 0% to 2%, as demand in the region slowly recovers from a period of weakness.

The 2020 Industry Forecast provides travel and procurement managers with projected prices, insights and guidance to prepare for new sourcing strategies, supplier negotiations and budgeting. In addition to providing global supply, demand and pricing trends for the air, hotel, ground transportation and meetings categories, the Industry Forecast includes in-depth reports on Africa, Asia, Europe, Latin America, the Middle East, North America and Southwest Pacific. A global economic overview includes a focus on travel risk and security.

You can download the full report here.

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