American Express Global Business Travel’s Forecast: Modest price gains

The American Express Global Business Travel Forecast 2016 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 moderate growth in Asia, the airline industry will see small 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 temperate gains. Ground transportation rates are expected to remain relatively flat as overcapacity, strong competition and a continued focus on ancillary fees persist globally.

Travel management program recommendations

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 

RELATED TOPICS: Greece, Greek tourism news, Tourism in Greece, Greek islands, Hotels in Greece, Travel to Greece, Greek destinations , Greek travel market, Greek tourism statistics, Greek tourism report