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Industry forecast for business travel in 2015.
Wednesday, 10th September 2014
Source : Advito
Air travel demand will grow quickly in 2015, as the global economy improves, and in many regions, especially Asia and Europe, competition is also growing, largely from low-cost carriers (LCCs) on short-haul routes and Middle Eastern airlines in long-haul markets.

Even where there's no change in supply, airlines fear damaging business and consumer confidence by increasing fares too fast. Advito expects airfares to rise little more than inflation, and in some markets they may even stay flat or fall.

The U.S. domestic market is one exception, as consolidation has reduced competition and is pushing up airfares in some markets. However, even in the U.S., airlines are being cautious out of fear that excessively high price increases could negatively impact demand.

Similar to last year, hotels are seeking corporate rate increases of 6% to 8% on average. In North America and Europe, Advito predicts that hotels will raise prices steeply for clients unable to drive business to preferred suppliers.

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Travel buyers with a strong track record of meeting targets coupled with favorable stay patterns, will successfully contain rate rises yet again.

In Asia, new hotel openings will keep hotel rate increases moderate and enhance buyers' negotiating positions. But in Latin America, supply is failing to keep up with demand, and higher inflation will likely push up rates. A small number of cities where demand is especially high, like New York, continue to push through much higher rate increases than the rest of the world. This trend will continue in 2015.

Car rental suppliers want to raise corporate rates after years of flat pricing, but Advito doesn't see any evidence of this in the market. However, the situation has remain unchanged for so long that 2015 may be the year rates finally do go up; probably by no more than 2-4%.

Advito, the consulting arm of BCD Travel, publishes its annual Industry Forecast to give travel and procurement managers a benchmark range of projected prices so they can prepare for supplier negotiations and budgeting. The forecast includes supply, demand and pricing trends for air, hotel, meetings, car rental and rail for all of the major regions in the world.

This year‘s forecast also highlights the great YQ (fuel surcharge) box scandal, dynamic hotel pricing and the sharing economy, among other topics.

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