CWT: 2012 Corp. Travel Prices To Increase Most In 'Booming' Latin America

A new Carlson Wagonlit Travel travel pricing forecast, like those published by other travel management companies during this budgeting season, "confirms that prices in most geographic areas and for most categories of spend are expected to rise in 2012." Based on global client transaction data, the CWT report, issued this week, projected that "the most substantial increases" will occur in "booming" Latin America.

In other regions, notably Europe, the travel management company anticipates, more modest increases in airfares, hotel rates and car rental rates, with mainly marginal to moderate growth. Meetings trends diverge across the Atlantic; the forecast for North America calls for annual 2012 increases in average meeting size and per-day attendee cost as high as 4 percent and 6.5 percent, respectively, while Europe, the Middle East and Africa may see declines of up to 3 percent and 6 percent.

Latin America's economic growth will translate to significant travel price increases across most of the region, CWT projected. In Brazil, where "the strong demand for many travel services often outpaces supply," according to CWT, second-half 2012 average hotel rates may be up more than 30 percent. Airfares across Latin America may increase as much as 6 percent, with Colombia forecast to see the largest increase of more than 11 percent and Brazilian airfares up as much as 7 percent.

A recent American Express Business Travel forecast also projected price hikes for Brazil: between 2 and 10 percent for hotel rates and between 3 and 8 percent for airfares. According to Amex, consolidation among the country's airlines "will likely create capacity constraints in the market, which will then likely lead to fare increases in 2012."

In its forecast published in early September, BCD Travel's Advito predicted Brazilian hotel rates in 2012 would increase 4 percent to 6 percent year over year, while airfares across Latin America would grow at about the same clip.

Brazil's travel price inflation coincides with strong (though slowing) economic performance and business travel growth. The Global Business Travel Foundation this summer published a study forecasting a 17 percent year-over-year jump this year for the country's business travel spending, and 7 percent growth annually for following five years.

The overall Asia/Pacific region also is experiencing comparatively strong economic indicators and travel volumes. CWT anticipates airfare hikes in the 3 percent to 4 percent range, with flattish hotel rates. Airfare increases in China are expected to push 7 percent. For Australia and New Zealand, CWT predicted average daily hotel rates would grow as much as 5 percent.

The forecast includes flat EMEA travel prices, owing to the region's economic uncertainty. CWT said EMEA carriers expect to raise prices only by low-single-digit percentages, despite "disciplined" capacity management. At the same time, fuel surcharges levied by the region's carriers "can often rival the price of the fare itself, substantially increasing the overall cost to fly for travelers." CWT's hotel rate predictions in the region for the first half of the year range from a decline in Finland by as much as 7 percent to 7 percent growth in France. For meetings across EMEA, overall attendee travel costs are expect to decline as "more meetings will be held domestically rather than in other countries."

In North America, CWT anticipates travel prices to increase generally by low-single-digit percentages from 2011 levels. Airfare growth may hit 4 percent as carriers "reduce supply even in the face of demand that remains intact in both economy and premium class cabins, at least for now." North American hotel ADRs will grow by around 3 percent, with increases between 4 percent and 7 percent in the northeastern United States, according to CWT. Car rental prices, however, could show a marginal decrease amid "intense" competition among the few major suppliers. The "steady recovery" in the region's corporate meetings market will be characterized by availability concerns, and hotels will be less willing to provide flexibility on contractual terms like attrition and cancellation clauses.