(11 August 2022, 12:02 +07)
According to the 2023 Global Business Travel
Forecast, published on Wednesday by CWT and the Global Business Travel
Association (GBTA), global travel prices are predicted to continue
to increase for the remaining months of 2022 and throughout 2023.
Rising fuel prices, labor shortages and
inflationary pressures in raw material costs are the primary
drivers of the expected price growth, according to the report,
which uses anonymized data generated by CWT and GBTA, with
publicly available industry information and econometric and
statistical modeling developed by the Avrio Institute.
“What we are seeing now are multiple factors
coming into play when corporate travel buyers and procurement
officers model their travel programs. This eighth joint annual
forecast marries statistical travel data and trend analysis with
macroeconomic influences to provide a cornerstone reference point
for their corporate business travel planning ahead,” said Suzanne
Neufang, Chief Executive Officer of GBTA.
The world economy shrank 3.4% in 2020 in one of
the worst declines since World War II.
Service sectors, including travel and hospitality,
were hit especially hard, but the global economy recovered
briskly, rising off the lows of 2020 and increasing 5.8% in 2021.
Economic growth is moderating as the recovery lengthens, although
another recession is a growing concern. The current base case
scenario for 2022 is for 3% growth, followed by 2.8% growth in
2023.
Cautionary notes also highlighted in the 2023
Global Business Travel Forecast, highlight the three main forces
exerting 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
pushing costs higher, and the risk of further COVID outbreaks that
could restrict business travel.
Conversely, with businesses ranking sustainability
among their top priorities and reflecting the accelerated
importance of combating climate change, the report highlights
greater visibility at the point of sale for greener travel
options, as well as carbon foot-printing, and environmental impact
assessment is an opportunity for the travel industry to actively
assist in responsible choice-making.
Prices have increased in all regions across most
categories of spend, fueled by pent-up demand, a desire to build
company culture and an uncertain economic outlook. The
cost-per-attendee for meetings and events in 2022 is expected to
be around 25% higher than in 2019, and it’s forecast to rise a
further 7% in 2023.
Alongside pent-up demand, corporate events are now
competing with many other types of events that were cancelled in
2020. And, with many companies having given up office space during
the pandemic in favor of remote working, they are now booking
meeting spaces when staff gather in person, further fueling
demand.
Shorter lead times for events, varying from one to
three months versus six to 12 months, are also contributing to
this perfect storm, perhaps underscored by corporate concerns that
the situation they face today could change very rapidly. This is
particularly noticeable within Asia Pacific, which has been slower
than other regions to re-open post-pandemic, with ongoing
restrictions in China prompting clients to make sure their events
can go ahead, and as quickly as possible.
Air Travel
Business travel airfares fell over 12% in 2020
from 2019 followed by an additional 26% decline in 2021. Economy
ticket prices fell over 24% from 2019 to 2021, while premium
tickets fell 33%.
Man walking at Suvarnabhumi Airport (BKK). Picture by Steven Howard of TravelNewsAsia.com
Prices are expected to rise 48.5% in 2022, but
even with this steep price increase, prices are expected to remain
below pre-pandemic levels until 2023. Following an increase of
48.5% in 2022, prices are expected to rise 8.4% in 2023.
Rising demand and continued price rises on jet
fuel, which have seen prices more than double in some markets to
over $160/barrel according to S&P Global, are putting upward
pressure on ticket prices.
Premium class tickets comprised over 7% of all
tickets purchased in 2019. The share of premium class tickets fell
to 6.5% in 2020 and to 4.5% in 2021 but have started to rise in
2022. Through the first half of the year, premium tickets made up
6.2% of all tickets purchased. A rising share of premium class
tickets will result in higher average fares as average ticket
price comprises economy and premium.
International and cross border bookings are
recovering across most regions which will result in a higher share
of international ticket bookings and a corresponding higher
average ticket price despite uncertainties caused by the war in
Ukraine. Following two years of minimal to no expenditure,
business travelers are likely to be willing to spend more on
tickets, especially as availability reduces due to labor
shortages. This upward trend is largely due to widespread vaccine
rollouts and border re-openings.
Hotel
Hotel prices fell 13.3% in 2020 from 2019 and a
further 9.5% in 2021, however the report expects them to rise
18.5% in 2022 followed by an 8.2% lift in 2023. Hotel prices have
already eclipsed 2019 levels in some areas such as Europe, the
Middle East & Africa and North America and are expected do so
globally by 2023.
Hotel rates have risen sharply in parts of the
world including a 22% rise in North America – and a forecast 31.8%
across Europe, the Middle East & Africa – driven by an accelerated
recovery coupled with continued 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
similarly gaining healthy pace, putting further pressure on
average daily hotel rates.
Ground Transportation
Global car rental prices fell 2.5% in 2020 from
2019, before rising 5.1% in 2021. Prices are expected to increase
7.3% in 2022, hitting new highs, and rise a further 6.8% in 2023.
The vehicle industry remains capacity constrained
and rental agencies which reduced fleet sizes in the wake of the
pandemic, have not yet fully recovered – due in part to component
shortages and supply chain disruptions that have reduced global
auto production.
Rental agencies have reverted to buying used
vehicles to increase fleet sizes and are keeping their vehicles
longer. Some agencies are also buying vehicles from auto-makers
outside of their historically supported brands.
Skyrocketing prices, vehicle shortages and the
need for visibility into carbon emissions from door-to-door are
driving corporate travel managers to factor ground transport into
full trip planning from the beginning. This is especially true
when factoring in the inclusion of electric vehicles, and while
widespread adoption may still be a few years away, personal
preference should not be underrated.
“Demand for business travel and meetings is back
with a vengeance, of that there is absolutely no doubt,” said
Patrick Andersen, CWT’s Chief Executive Officer. “Labor shortages
across the travel and hospitality industry, rising raw material
prices, and greater awareness for responsible travel are all
having an impact on services, but predicted pricing is, on the
whole, on par with 2019.”
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