Economic upswing causes hotel and airline prices to rise

Travel prices are expected to rise sharply in the coming year, according to the fifth Global Travel Forecast, published annually by the Global Business Travel Association GBTA and Carlson Wagonlit Travel with support from the Carlson Family Foundation. Alone in Western Europe, hotel prices are expected to increase by 5.6% and airfares by 4.8%. "Although most markets are on a good path economically, there are several factors that could have a negative impact on the global economy. These include protectionist measures, the risk of trade wars and the uncertainties surrounding Brexit," explains Michael W. McCormick, Executive Director and COO of GBTA. And Kurt Ekert, president and CEO of Carlson Wagonlit Travel, adds, "Prices are expected to rise in many markets around the world, even as inflation remains subdued."

Forecasts for airfares 2019

The airline sector will be characterized by the introduction of ultra-long-haul flights, the tendency of airlines towards new distribution models and growing competition from low-cost carriers, which are now also entering the market for intercontinental flights. Higher airfares are ultimately to be expected as a result of the rising price of oil, increased competition due to a shortage of pilots, possible trade wars and an increase in price segmentation.

• In Western Europe, a price increase of up to 4.8% can be expected for flights. The increase is particularly significant in Norway (+11.5%), Germany (+7.3%), France (+6.9%) and Spain (+6.7%). In contrast, airfares in Eastern Europe, Middle East and Africa will fall between 2% and 2.3%.
• In North America, only a slight price increase of 1.8% is expected, according to the forecast. Airlines in the U.S. are revising their offerings to better respond to market demand, depending on how trade relations between the U.S. and other countries will develop. Prices for flights in Latin America are expected to fall by 2% in the coming year. However, a slight increase of 0.1% and 1.2% can be observed in Mexico and Colombia, respectively. The price increase will be very significant in Chile (+7.5%).
• In the Asia-Pacific region, the forecast predicts a price increase of 3.2%. Demand in China remains high (+3.9% for airfares) - the country will also be the world's largest travel market in 2020. In addition to China, however, other countries in the region see rising airfares ahead - particularly New Zealand (+7.5%) and India (+7.3%). The only country in the region where prices will fall is Japan, at -3.9%, because the country has already expanded its capacity for the 2020 Olympics.

Hotel price forecasts 2019

The forecasts for hotel prices are directly related to the growth in the airline sector, which is creating greater demand for hotel rooms. Hotels are focusing on the use of new technologies to offer their guests a personalized travel experience. The hotel landscape will also change with further mergers, as high-priced hotels will have to compete with mid-priced hotels for younger travelers who are increasingly turning to boutique hotels.

• In the Europe, Middle East and Africa region, prices in Western Europe are expected to rise by 5.6% for overnight hotel stays. Prices in Eastern Europe and Middle East/Africa, on the other hand, will fall by 1.9% and 1.5%, respectively. The price increase is particularly pronounced in Norway (11.8%), Spain (8.5%), Finland (7.1%) and France as well as Germany with 6.8% each.
• Hotel prices in North America will also rise, according to the forecast - 5% in Canada and 2.7% in the US.
• The Asia-Pacific region will see a price increase of 5.1%. There are major differences: while prices in Japan are expected to fall by 3.2%, there is likely to be a price increase of 11.8% in New Zealand.
• In Latin America, the forecast predicts falling prices of 1.3%. While hotel prices are expected to decline by 3.5% in Argentina, 1.9% in Brazil, and 0.7% in Colombia, prices are expected to increase in Chile (+6.4%), Peru (+2.1%), and Mexico (+0.6%).

Price forecast for bus, train, rental car and cab

According to the Travel Price Forecast, only North America is expected to see a slight increase in prices for means of transport such as buses, trains and cabs in the coming year (+0.6%). In all other regions, prices will remain stable. However, rental car companies may raise their prices, especially in the fourth quarter of 2019. Travelers will increasingly rely on apps for private ride services, while interest in high-speed trains will decline due to high costs associated with low expansion of the required technology. In the rental car sector, new technologies are setting trends, such as the use of connected cars.

• The forecast predicts stable prices for the Europe, Middle East and Africa region. However, in some Western European countries, such as Finland, France, Germany, Italy and Spain, price increases of over 4% may be possible - in Norway it is expected to be as much as +10%. In turn, Sweden can expect a price drop of 13.9%.
• While prices in the overall North America region will increase only slightly (+0.6%), they are expected to rise by 3.6% in Canada. The trendsetter in the region could be Audi's app-based car rental provider Silvercar, which enables mobile bookings and has greatly simplified the pick-up and billing process.
• In the Asia-Pacific region, the price development for road and rail transportation will also remain stable. Only in New Zealand (+4%), India (+2.7%) and Australia (+2.4%) will prices increase. Didi Chuxing will continue to expand its investments in autonomous driving, while Uber has already conceded the field to domestic private ride services in Southeast Asia.

Business travel is becoming increasingly personalized

In addition to economic outlooks and forecasts for hotel and airfares, the report also provides an overview of current trends in the business travel industry. "The future of business travel can be described as accelerated personalization. Mobile technologies, artificial intelligence and the use of chatbots and predictive data play an important role in this," says Kurt Ekert. "The success of a travel program is closely linked to new technologies and intelligent processing of data."

Source: Carlson Wagonlit Travel