Business travelers are expected to see airfares increase by 8.4%, hotel rates by 8.2% and car rental costs by 6.8% in 2023

This is on top of a projected increase for the year 2022 in air fares of 48.5%, hotel fares of 18.5% and car rental costs of 7.3%.

Minneapolis, United States – world travel prices are expected to continue to rise in the remaining months of 2022 and throughout 2023, according to the Global Business Travel Forecast 2023published today by CWTthe B2B4E travel management platform, and the Global Business Travel Association (GBTA)the voice of the global business travel industry.

Rising fuel prices, labor shortages and inflationary pressures on raw material costs are the main drivers of expected price growth, according to the report, which uses anonymized data generated by CWT and GBTA. , with publicly available sector information and econometric and statistical modelling. developed by the Avrio Institute.

travel

“The demand for business travel and meetings is back in full force, there is no doubt about it”, said Patrick Anderson, Chairman and CEO of CWT. “Labour shortages in the travel and hospitality industry, rising commodity prices and greater awareness of responsible travel are all impacting services, but the expected prices are, overall comparable to 2019.”

“What we’re seeing now are multiple factors that come into play when business travel buyers and purchasing managers model their travel programs. This eighth annual joint forecast combines statistical travel data and analysis. trends with macroeconomic influences to provide a fundamental point of reference for their business travel plan ahead,” said Suzanne Neufang, Chairman and CEO of GBTA.

Macroeconomic influences

The global economy shrank 3.4% in 2020 in one of the worst declines since World War II. Services sectors, including travel and hospitality, have been particularly hard hit, but the global economy has recovered strongly, surpassing 2020 lows and growing by 5.8% in 2021. Economic growth is moderating as the recovery drags on, although another recession is a growing concern. The current base case for 2022 is for 3% growth, followed by 2.8% growth in 2023.

The caveats also highlighted in the 2023 Global Business Travel Forecast highlight the three main forces putting pressure on the economy and the business travel industry. These include Russia’s invasion of Ukraine coupled with other geopolitical uncertainties, inflationary pressures that are driving up costs, and the risk of new COVID outbreaks that could restrict business travel.

Conversely, with companies ranking sustainability among their top priorities and reflecting the accelerating importance of addressing climate change, the report highlights greater point-of-sale visibility for greener travel options, as well as carbon footprinting, and environmental impact assessment is an opportunity for the travel industry to actively help make responsible choices.

Meetings and Events

Prices rose in all regions across most spending categories, fueled by pent-up demand, a desire to develop an entrepreneurial culture and an uncertain economic outlook. The cost per attendee for meetings and events in 2022 is expected to be about 25% higher than in 2019, and is expected to increase another 7% in 2023.

Along with pent-up demand, corporate events are now competing with many other types of events that were canceled in 2020. And, with many businesses giving up office space during the pandemic in favor of remote working , they are now booking meeting spaces when staff meet in person, further fueling demand.

Shorter lead times for events, ranging from one to three months versus six to 12 months, also contribute to this perfect storm, perhaps underlined by businesses’ fears that the situation they face today could change very rapidly. This is particularly noticeable in Asia-Pacific, which has been slower than other regions to reopen after the pandemic, with ongoing restrictions in China prompting customers to ensure their events can go ahead, and as quickly as possible.

Air

Business airfares fell more than 12% in 2020 compared to 2019, followed by a further drop of 26% in 2021. Economy class ticket prices fell more than 24% from 2019 to 2021, while premium tickets fell by 33%. Prices are expected to increase by 48.5% in 2022, but even with this sharp price increase, prices are expected to remain below pre-pandemic levels through 2023. After a 48.5% increase in 2022, prices are expected to increase by 8.4% in 2023.

Growing demand and the continued rise in jet fuel prices, which have more than doubled in some markets to more than $160 a barrel according to S&P Global, are putting upward pressure on ticket prices.

Premium class tickets accounted for more than 7% of all tickets purchased in 2019. The share of premium class tickets fell to 6.5% in 2020 and 4.5% in 2021, but started to increase in 2022 In the first half of the year, premium tickets accounted for 6.2% of all tickets purchased. An increasing share of premium class tickets will result in higher average fares, as the average ticket price includes economy class and premium class.

International and cross-border bookings are picking up in most regions, which will translate into a higher share of international ticket bookings and a corresponding higher average ticket price despite the uncertainties caused by the war in Ukraine. After two years of minimal or no spending, business travelers are likely to be willing to spend more on tickets, especially as availability dwindles due to labor shortages. This upward trend is largely due to widespread vaccine deployments and the reopening of borders.

Hotel

Hotel prices fell 13.3% in 2020 from 2019 and a further 9.5% in 2021, but the report projects they will increase by 18.5% in 2022, followed by an increase of 8 .2% in 2023. Hotel prices have already eclipsed 2019 levels in some regions such as Europe. , the Middle East and Africa and North America and is expected to do so globally by 2023.

Hotel rates have risen sharply in some parts of the world, including a 22% rise in North America – and a forecast 31.8% in Europe, the Middle East and Africa – thanks to an accelerated recovery associated with persistent capacity constraints.

Hotel rate increases were initially driven by strong leisure travel in 2021, but group travel for corporate meetings and events is improving and transient business travel is also growing at a healthy pace. which puts additional pressure on average daily hotel rates.

Land transportation

Global car rental prices fell 2.5% in 2020 compared to 2019, before rising 5.1% in 2021. Prices are expected to rise 7.3% in 2022, reaching new highs , and increase further by 6.8% in 2023.

The auto industry remains constrained in terms of capacity and rental agencies, which have downsized their fleets in the wake of the pandemic, have yet to fully recover – partly due to component shortages and disruptions supply chain that have reduced global automotive production.

Rental agencies have started to buy used vehicles again to increase the size of their fleet and keep their vehicles longer. Some agencies also purchase vehicles from automakers outside of their historically supported brands.

Soaring prices, vehicle shortages, and the need for door-to-door carbon emissions visibility are driving corporate travel managers to incorporate ground transportation into comprehensive trip planning from the start. This is especially true when considering the inclusion of electric vehicles, and while widespread adoption may still take a few years, personal preference should not be underestimated.

For more detailed information, including geographic breakdowns and more in-depth information on trends and analysis, please view the report online here, where you can also download a PDF version of the 35-page report.

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