GBT Biz Travel Forecast Sees Higher Rate Growth In Canada
Bruce Parkinson, Open Jaw
American Express Global Business Travel (GBT) has released its 2018 Business Travel Forecast, offering insights and data into trends along with predictions for air, rail, hotel and ground for the coming year.
In North America, rate growth is expected to be highest here in Canada, where GBT says a rebounding economy and weak dollar should stoke demand from U.S. visitors, particularly in Canada’s largest cities. The biggest impact will be on Canadian hotel rates, expected to rise by 5.6% in 2018. Car rental prices are expected to rise by 2.3%, short-haul economy fares by 2.1% and long-haul business class air by 0.8%.
The report included several additional highlights for travel in the coming year:
Canada’s strengthening economy and still relatively weak dollar will continue to draw American visitors north of the border in 2018, having a particularly positive impact on hoteliers in key leisure, meeting, and convention cities, including Vancouver, Toronto, and Montreal.
In a reversal of conditions in the U.S., hotel demand continues to outpace supply in many Canadian cities, resulting in healthy occupancy and rate growth.
Rental car rates in North America will increase for the first time in years, driven by supplier efforts to meet traveller needs through vehicle enhancements and innovations. Canada is expected to see moderate increases in ground travel rates due to a number of factors, namely positive economic conditions, better fleet management and higher fleet costs for rental car companies.
GBT says the overall outlook for international business travel is generally optimistic. Demand is being driven by a steadily improving global economy and growing confidence among business and investor communities.
Demand for business travel started to rebound last year, and is expected to grow over the next 12 months, with some notable gains expected in Europe and Asia. China and India’s high-powered economies once again lead the way. However, prices will see only marginal gains, as suppliers rapidly increase capacity to meet demand as they compete for market share.
Despite the recent economic progress made in many global marketplaces, an element of caution remains in some quarters. Geopolitical instability combined with moves by some governments towards more protectionist economic policies has generated an undercurrent of uncertainty in the business community.
Additional global highlights include:
Air: While strong demand is expected to spur airfare increases across all regions, overcapacity on certain routes, aggressive expansion by low-cost carriers (LCCs), and low oil prices will keep them in check. Full-service carriers are increasingly unbundling fares and adding premium economy seating options to entice consumers to better compete with LCCs.
Hotel: Hotel performance is expected to improve globally, with small to moderate rate increases driven by strengthening regional economies, despite robust investment in new hotel supply. Total costs, however, should increase even further as additional ancillary fees and stricter cancellation policies are applied by many hotels looking to bolster profitability.
Ground: After years of flat or negative growth, rental car rates should finally see increases as companies improve their fleet management while operating costs put pressure on pricing. However, competition will remain fierce. In the absence of significant rate increases, car rental companies are once again turning to ancillary services and fees to drive greater profitability.
David Reimer, GBT’s GM & SVP, North America, believes these developments will allow travel managers to focus on the traveller experience rather than cost in 2018.
“In this time of economic rally, travel managers should aim to provide business travelers with the tools and services that will not only ensure satisfaction, but also encourage compliance and mitigate undue risks,” he said. “Business travel is a crucial driver of growth, and now is the opportunity to reaffirm commitment to it with more strategic and traveler-considerate planning.”
Bruce Parkinson Editor-in-Chief
An observer and analyst of the Canadian and international travel industries for over 25 years, Bruce uses the pre-dawn hours to prepare a daily news and information package to keep industry members up to date.