2017 Global Travel Price Outlook Identifies Key Risks
New GBTA Foundation research identifies 6 key risks heading into 2017 that could impact both travel industry prices and the global economy as a whole.
They are: emerging market performance; financial market turbulence; geopolitical risks; uncertainty surrounding Brexit; potentially fluctuating U.S. interest rates and oil prices.
“While business travel repeatedly demonstrates its resilience, the high level of global uncertainty we face heading into 2017 means travel buyers have to be more nimble and flexible than ever in crafting travel programs,” said Jeanne Liu, GBTA Foundation Vice President for Research.
“The outlook shows only marginal increases or flat travel prices, but for 2017, the key to building successful travel programs will be watching and reacting to an ever-changing global landscape.”
The findings come from the 2017 Global Travel Price Outlook, research jointly conducted by the GBTA Foundation, the education and research arm of the Global Business Travel Association and Carlson Wagonlit Travel. The 3rd annual report provides global, regional and country-by-country projections for air travel, hotel, ground transportation and meetings and events prices in 2017.
“We are seeing relatively low, inconsistent and in some cases fragile economic growth,” says Kurt Ekert, CWT President & CEO. “Travellers and travel managers need to understand their travel patterns and spend, and be alert to the impact of economic uncertainty and volatility. Proper planning will put them in position to make changes when necessary, and to avoid downside financial risk.”
Airline prices are projected to increase only 2.5% in 2017, while fares may actually fall below 2015 levels in some markets due to continued low oil prices. Ancillary fees will have an increasing impact: they grew to 7.8% of global airline revenue in 2015 and that trend is set to continue.
In North America fares are projected to increase 3.7%. Carriers are expected to reinvest some of the profits enabled by low fuel prices to purchase new aircraft and improve their product.
Mega hotel mergers are grabbing headlines, but their impact on prices likely won’t be felt until 2018. Hotel services such as room service, laundry and security remain important to corporate travellers. Traditional hotels, therefore, remain an attractive option for business travellers, despite the sharing economy options.
Overall, North American hotel prices are expected to rise by 4.0% in 2017, but it will be a tale of 2 coasts. West Coast cities, including Seattle, Los Angeles, San Jose and Vancouver, will experience high single to double-digit growth because of the high-tech boom and a shortage of hotel rooms.
Meanwhile, East Coast cities including New York City and Toronto, as well as Canada’s oil and gas region, will face low growth or even a reduction because of an over-supply of hotel rooms.
An intensely competitive climate will dictate continued flat pricing for the global ground transportation sector. Prices in North America are expected to remain flat in 2017.
Meetings & Events
Modest increases in cost per attendee, per day, for meetings and events are expected for Asia Pacific and North America. Europe is expected to remain flat and Latin America will see a decrease of 10%.