By Catie Owen.
Global travel prices are predicted to continue to increase in Q3 and Q4 of 2022 and throughout 2023, according to the 2023 Global Business Travel Forecast.
Published by CWT, a B2B travel management platform, and the Global Business Travel Association (GBTA), the forecast covers the drivers behind the increasing prices.
According to the report, these are rising fuel prices, labour shortages, and inflationary pressures in raw material costs. This is on top of a predicted full-year 2022 increase in air fares of 48.5%, hotel rates of 18.5%, and car rental charges of 7.3%.
The report’s findings include:
Macroeconomic influences
The world economy shrank 3.4% in 2020. Service sectors, including travel and hospitality, were hit the hardest. However, the global economy recovered briskly – rising off the lows of 2020 and increasing by 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.
There are three main forces exerting pressure on the economy and the business travel industry:
1) Russia’s invasion of Ukraine coupled with other geopolitical uncertainties.
2) Inflationary pressures are pushing costs higher.
3) The risk of further Covid-19 outbreaks could restrict business travel.
Conversely, as businesses rank sustainability among their top priorities and reflect the increased importance of combating climate change, the report highlights greater visibility at the point of sale for greener travel options.
Additionally, the focus was put on carbon footprinting and environmental impact assessment as opportunities for the travel industry to actively assist in responsible choice-making.
Meetings and events
Prices have increased in all regions across most categories of spend, fuelled by pent-up demand. The cost-per-attendee for meetings and events in 2022 is expected to be around 25% higher than in 2019 and is forecast to rise a further 7% in 2023.
Corporate events are also now competing with other types of events that were cancelled in 2020. With many companies having given up office space during the pandemic in favour of remote working, they are now booking meeting spaces when staff gather in person.
Air
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%. Prices are expected to rise 48.5% in 2022, but will remain below pre-pandemic levels until 2023. Following an increase of 48.5% in 2022, prices are then expected to rise 8.4% in 2023.
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.
Prices have already overtaken 2019 levels in some areas such as Europe, the Middle East, Africa and North America. They are expected to do so globally by 2023.
Hotel rates have risen sharply in certain parts of the world, including a 22% rise in North America and a forecast 31.8% across Europe, the Middle East, and Africa. This is driven by an accelerated recovery coupled with continued capacity constraints.
These increases were initially driven by strong leisure travel in 2021, but group travel for MICE events is improving. Transient business travel is similarly gaining a 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 and rise a further 6.8% in 2023.
Increased 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.
