BCD
Travel consultancy Advito this week issued a revised forecast for 2012 business
travel pricing that suggested economic troubles in Europe will contribute to
minimized airfare hikes in that region while increasing corporate demand in
Latin America will lead to larger airfare and hotel rate hikes than previously expected.
For
Europe, Advito cut its intercontinental airfare projection to a 3 percent
year-over-year increase from its initial 5 percent forecast, left its average
daily hotel rate forecast of up to a 3 percent increase unchanged and cautioned
that macroeconomic volatility could prompt further revisions. "Outright
recession in major markets, a subsequent drop in consumer confidence and a
potential credit crunch from banks unwilling to lend could lead to a
significant fall-off in demand," the consultancy wrote. "If that
happens, airlines will have a much harder time sustaining projected fare
increases and airfares could fall."
According
to Advito, the business travel market is much stronger in Latin America. Given
solid corporate demand and airline capacity cuts, the firm now expects 2012
airfare increases in Latin America of 7 percent for intercontinental travel (up
from its original prediction of 4 percent) and 8 percent for regional travel
(up from 5 percent).
Latin
America hotel ADR forecasts also were revised upward, on average by 3
percentage points, to 8 percent to 10 percent of year-over-year growth.
Some
markets are expected to see much larger jumps. Citing "extremely strong
demand in Brazil," Advito now expects ADR in that country to rise as much
as 20 percent this year. It projected similar increases for São Paulo and Rio de Janeiro.
For
Asia, Advito also upped its forecast 2012 ADR increase on average by 3
percentage points. It expects some of the largest jumps in the
"robust" demand markets of Hong Kong (15 percent), Singapore (10
percent) and Australia (8 percent). Accounting for increasing corporate demand,
Asian regional economy-class airfares, meanwhile, now are pegged to increase on
average by 9 percent, up from the earlier forecast of 5 percent.
Advito
kept unchanged ADR forecasts across the Middle East, except upward adjustments
in Saudi Arabia (now projected to rise by 14 percent) and Israel. The
consultancy also moved up by 3 percentage points the region's expected average
airfare increase.
In
North America, hotel ADR and average airfare predictions were not revised,
though Advito noted that for the latter, "transatlantic prices are coming
in slightly below average due to pockets of surplus capacity and lower traffic
growth, and routes to Latin America are coming in slightly above average due to
high demand coupled with limited capacity growth."