LONDON, December 1, 2015 /PRNewswire/ --
Gradually-improving
economies, lower gas prices and stronger
demand will lead to slightly higher travel
prices across all regions
The American Express Global Business Travel Forecast 2016 (the
"Forecast"), predicts air, hotel and ground transportation prices
will see modest gains in 2016, as a slowly-improving global economy
and stronger demand outpace increases in supply. Led by favourable
market conditions in North America
and tempered growth in Asia, the
airline industry will see slight pricing gains as increased demand
is offset by similar growth in capacity, partially spurred by lower
fuel costs. Global hotel performance is also expected to improve
moderately in 2016, as limited increases in inventory fail to keep
pace with the growing global appetite for travel. Overall,
North America is expected to
continue its momentum from 2015 and experience healthy rate
increases, while Asia-Pacific and
Europe will show moderate gains.
Ground transportation rates are expected to remain relatively flat
as overcapacity, strong competition and a continued focus on
ancillary fees persist globally.
American Express Global Business Travel's ("GBT") annual
Forecast provides subscribers with over 1,800 pricing predictions
across airfares, hotel rates and car rental rates in the Americas;
Europe, Middle East and Africa (EMEA); and Asia-Pacific (APAC), as well as related travel
management program recommendations.
"While we expect modest increases in global travel prices
heading into 2016, travel managers are operating in an era of new
challenges and evolving disrupters," said Caroline Strachan, Vice President, Consulting,
American Express Global Business Travel. "In addition to handling
tasks such as measurement and compliance, new factors such as the
sharing economy and mobile booking channels are becoming
increasingly popular for business travellers. In order to thrive in
this digital era, travel managers need to be aware of and
dynamically adapt to these forces across a variety of
geographies."
EMEA Predictions & Dynamics
In 2016, European air prices are expected to remain relatively
stable, with the exception of premium cabin travel costs, which are
expected to tick higher. Variability persists across the region,
however, the United Kingdom is
poised for another strong year with steady demand and new routes
being added among airlines. Air prices are expected to remain
stable in the Nordic countries, despite the expansion of Low Cost
Carriers (LCCs) across the region. Taking advantage of their new,
highly efficient fleets, these carriers will put pressure on
short-haul Economy fares. Continued pressure from both LCCs and
Gulf Carriers will place strong downward pressure on fares
throughout Europe, particularly on
short- and long-haul routes to Asia.
In the Middle East, the
combination of rapid capacity growth by Gulf Carriers and lingering
weakness in the region's oil-based economies are generally pushing
prices lower, with the exception of premium long-haul fares. In
Africa, airfares are expected to
increase slightly in 2016 as a result of protectionist policies
impacting intra-regional flights and higher infrastructure costs.
Given Africa's limited ground
infrastructure, air travel to and from the continent continues to
be the most convenient method of travel. However, high operating
costs, a lack of low-cost carriers (outside of South Africa), and stringent intra-continental
regulation are expected to support fare increases within the
region.
While increased competition and growing demand for smaller, more
fuel-efficient vehicles should keep base fares relatively flat in
2016, the average daily rates for ground transportation in
Europe, the Middle East and Africa are all expected to rise in 2016 on
higher ancillary expenses. Car-sharing services will also see
significant growth in 2016 as major car rental companies make
further investments in this area.
EMEA Airfare & Car Rental Forecast
Short-Haul Long-Haul Short-Haul Long-Haul Car Rental Base
Region Business Class Business Class Economy Economy Rates
Europe -1% to 2% 1% to 3% -2% to 1% -3% to 0%
-1% to .5%
Middle East
& Africa 2% to 5% 1% to 3% 2% to 3% 0% to 1%
Source: American Express
Global Business Travel Forecast 2016
In 2016, hotel rates across Europe are expected to experience moderate
price increases, as Europe's
economy stabilises and demand increases without much corresponding
growth in inventory. Growth will generally be stronger in larger
cities where the weaker euro is spurring increased tourism. In the
Middle East and Africa, an increasing inventory of mid-range
offerings will provide travellers with more affordable choices, but
rates will still rise on stronger economics in 2016.
EMEA Hotel Forecast
Region Mid-Range Hotel Upper-Range Hotel
EMEA 1.7% to 3.3% 1.8% to 3.5%
Source: American Express Global Business
Travel Forecast 2016
Americas Predictions & Dynamics
North America
In North America, business
travellers can expect minimal increases in air travel categories in
2016. In the United States, the
airfare outlook is mixed as the economy continues to show steady
growth and corporate demand increases. However, weaker capacity
discipline among carriers and changing traveller behaviors have
resulted in lower yields. For short-haul flights, increased
competition and growth among budget-carriers will help suppress
price increases, while fares on long-haul flights are expected to
remain relatively flat, particularly on routes to Asia and Latin
America. In Canada, the
Forecast predicts slight declines for short and long-haul prices as
a result of strong competition and the lower price of oil, which
continues to be a damper on the economy.
Increased demand and higher group travel are expected to drive
strong rate increases for North American hotels in 2016. Overall,
momentum from 2015's strong rate performance is expected to carry
on through 2016 as corporate travel managers continue to be
challenged in negotiating aggressive discounts. Major US cities,
which are seeing higher occupancy levels, continue to be supported
by robust corporate travel and group businesses. While a healthy
pipeline of new construction is on the horizon, the impact from
added inventory is not likely to appear until after 2016. In
secondary markets, excess inventory will dampen price increases
while competition for customers is pushing hotel brands to focus on
property renovations. Across Canada, variability persists within each
province, however, the country is expected to see more moderate
price increases (2.5 percent) in 2016.
The ground transportation market across North America is expected to experience
limited growth in 2016, with ride sharing and ancillary charges
continuing to be key themes. Despite aggressive attempts by
suppliers to increase pricing, negotiated rates should remain
largely flat although increased ancillary fees will drive up
average costs. Smaller companies that are unable to negotiate
corporate rates will see more significant price increases.
Ride-sharing services are also expected to see greater mainstream
adoption and expansion in 2016.
North America Airfare, Hotel and Car Rental
Forecast
Short-Haul Long-Haul
Business Business Short-Haul Long-Haul Mid-Range Upper-Range Car Rental
Class Class Economy Economy Hotel Hotel Base Rates
.4% to .4% to -1.5% to .7% to 3.8% to 4.2% to
2.4% 2.9% 1.1% 2.7% 6% 6.3% 0% to 1%
Source: American Express
Global Business Travel Forecast 2016
Latin America
Overall, economic headwinds in Latin
America are expected to drive down air travel costs in 2016.
This downward pressure on pricing will be slightly more pronounced
on Economy fares, but will result in moderate price decreases
across the board. While the region's economies continue to
struggle, consolidation among Latin American carriers will help
mitigate the impact. Brazil will
remain a key destination for foreign air carriers, although many
have trimmed their schedules or postponed new routes. Additionally,
the depreciation of the Brazilian Real and other local currencies
against the U.S. dollar and euro will further lower domestic demand
for international air travel.
While Latin America continues
to face bouts of economic weakness and political uncertainty,
hotel rates are likely to rise as a result of inflationary
pressures heading into 2016. Due to its robust manufacturing
outlook and solid domestic consumption, Mexico remains one of the strongest economies
in Latin America and is poised to
experience favourable growth next year. Peru and Colombia are also expected to see hotel prices
rise in 2016 as relatively strong economies and political stability
make them attractive destinations for business and leisure
travellers.
Given the strong competition between the major car rental
companies and new local suppliers, Latin American car rental rates
are not likely to experience notable increases in 2016. Larger car
rental companies are expected to continue to establish themselves
across Latin America as they
capitalise on business from global corporations and local companies
with travel patterns that match their networks.
Latin America Airfare, Hotel and Car Rental
Forecast
Short-Haul Long-Haul
Business Business Short-Haul Long-Haul Mid-Range Upper-Range Car Rental
Class Class Economy Economy Hotel Hotel Base Rates
-3.5% to -4% to 1.3% to
-.5% -3% to 0% -4% to -.5% -1% 4.3% 1% to 3.5% 0% to 1%
Source: American Express
Global Business Travel Forecast 2016
APAC Predictions & Dynamics
Heading into 2016, airfare prices across the Asia-Pacific region are expected to show
moderate growth across both business and economy classes. Domestic
economy fares are expected to see the strongest fare hikes within
the region, despite competition from high-speed rail offerings in
China and Japan. Additionally, China will also show a mild uptick in fares as
demand, especially from the burgeoning middle class, keeps pace
with capacity and carriers expand their long-haul networks.
Increases will be also be strong in India as its booming economy and poor ground
infrastructure combine to push more travellers to solicit air
options.
APAC Airfare Forecast
Airfare Forecast Type Business Class Economy Class
Domestic 1% to 2.8% 2% to 3.5%
International .6% to 2.6% 1% to 2.7%
Intra-APAC 0% to 2% .5% to 2%
Source: American Express Global Business
Travel Forecast 2016
Mid- and upper- range hotels in Asia-Pacific are likely to experience moderate
growth in 2016, although this varies significantly by market. While
the anti-corruption campaign for government officials still impacts
luxury hotels across China, the
country continues to enjoy strong demand reflected in higher
average daily rates and occupancy numbers. Favourable exchange
rates and limited inventory is fueling substantial rate hikes in
Sydney and Tokyo, while the end of the mining boom is
having the opposite effect in the western half of Australia. In India, stronger demand is being offset by
lingering overcapacity that should result in relatively shallow
rate increases.
APAC Hotel Forecast
Mid-Range Hotel Upper-Range Hotel
1.3% to 3.7% 1.6% to 4%
Source: American Express Global Business
Travel Forecast 2016
For details on how to purchase the Forecast, which includes many
more country-specific insights on airfares, hotel and car rental
rates in regions throughout the world, please contact:
GlobalBusinessConsulting@aexp.com.
About the Global Business Travel Forecast 2016 and
Methodology
The Forecast is a key deliverable of Global Business Consulting
from American Express Global Business Travel as a part of their
EXPERT INSIGHTS research practice. The EXPERT INSIGHTS research
practice also produces monthly industry analysis, the Business
Travel Monitor pricing index, and detailed travel program best
practices and benchmarking reports.
The Forecast is based on a number of primary data sources,
including proprietary data from the Global Business Travel Monitor,
the American Express Global Business Travel contracted rates
database, aggregate transaction data, and secondary data sources
including Smith Travel Research (STR) Global Hotel Reviews, Center
for Asia Pacific Aviation (CAPA) and Airline Weekly.
With the 2016 transaction trends and expected global expenditure
context in hand, Global Business Consulting subject-matter experts
considered their recent front-line in-market and contract
negotiation experience to predict specific expected price changes
by country and region. This forecast also took care to make
predictions by fare type and classes of service for air and hotel,
as price changes differ within these variables. All ranges
represent forecasted year-over-year changes in negotiated business
travel rates.
Although the forecasts and projections provided in the report
are based on information gathered from internal and external
sources that American Express Global Business Travel believes to be
reliable, no representation or warranty is made as to the accuracy
of the forecasts or projections made herein. In addition, actual
changes in business travel costs could vary significantly from
forecasted data, particularly as a result of unforeseen future
political, economic, and/or environmental events.
About American Express Global Business Travel
American Express Global Business Travel enables corporations and
empowers business travelers with insights, connections and
exceptional customer service on a global scale. Through technology
and information, American Express Global Business Travel provides
leading travel solutions, integrated consulting services,
proprietary research, and end-to-end meetings and events
capabilities. These innovative offerings enable clients to optimize
the return on their travel and meetings investments.
American Express Global Business Travel has operations and
network partners in nearly 140 countries worldwide with
approximately 12,000 employees. American Express Global Business
Travel ranked first among corporate travel providers in the 2015
Corporate Travel 100 ("CT100"), an annual listing compiled by
Business Travel News which ranks companies with the largest volume
of U.S. air bookings. Learn more about how American Express Global
Business Travel connects the world at amexglobalbusinesstravel.com
and twitter.com/amexgbt.
American Express Global Business Travel ("GBT") is a joint
venture that is not wholly-owned by American Express Company or any
of its subsidiaries ("American Express"). "American Express Global
Business Travel", "American Express" and the American Express logo
are trademarks of American Express, and are used under limited
license.