The annual forecast by the Global Business Travel Association (GBTA) and those from Carlson Wagonlit Travel (CWT) state cost of hotel stay and travel is likely to shoot up in 2019.
According to an industry forecast, rising oil prices and a strengthening global economy are likely to result in an increase in the cost of air travel by around 2.6% while hotel rates are also likely to go up by 3.7%, although there are downsides risks stemming from the ongoing trade war.
In some countries, including India, Germany, Norway and Chile, airfares are expected to rise by 7% according to the annual business travel forecast from Carlson Wagonlit Travel (CWT) and the Global Business Travel Association (GBTA).
“Speaking for the Asia-Pacific region, we are coming off a period three to four years ago where there was a lot of capacity in the system (and) fares were down pretty significantly, potentially lower than was sustainable,” said Michael Valkevich, CWT’s vice president for global sales & program management, Asia Pacific. “So I think we are getting to a bit more of a renormalization of sustainable fares.”
Fuel and labor costs for airlines have been rising which had led many carriers to push up fares and fuel surcharges to customers so as to maintain their margins.
The CWT/GBTA 2019 forecast states, a rise in hotel rates would be driven by an increase in demand for air travel. Room rates are expected to rise by more than 5% in Europe and Asia and by 2.1% in North America; they are expected to fall by 1.3% in Latin America.
Hotel groups, including U.S.-based Marriott International Inc and France’s Accor SA have reported a strong growth in revenues for their available room in Europe and Asia, in 2018.
The CWT/GBTA forecast said despite its positive outlook, risks remained for the global economy in 2019 from the rise of protectionist policies, the stoking of trade wars and uncertainty over Britain’s exit from the European Union.
According to Valkevich, the U.S.-China trade war had not yet led to any noticeable drop in demand for business travel, but it was a “downside risk factor” for the corporate travel industry.