Advito: Slight Travel Price Increases On Tap For 2014

Advito expects only modest gains in corporate travel pricing and demand next year, with overall year-over-year average price increases "in line with inflation at most" and demand in major regions projected to align with gross domestic product levels, according to the BCD Travel consulting unit's annual forecast, released Monday.

The forecast largely is in line with the moderate 2014 corporate travel price increases projected recently by competitor Carlson Wagonlit Travel.

Average airfares next year are expected to range from 2 percent lower to 3 percent higher than 2013 levels, varying by region and class of service, according to the forecast. Driven by local market conditions, hotel pricing projections vary widely, but overall average rates are on pace to increase moderately.

Meanwhile, rental car suppliers in 2014 finally may achieve long-sought rate increases, but by no more than 4 percent year over year on average, according to Advito, which continues to see opportunity "for many customers" to lock in flat year-over-year pricing amid "intense competition between the three major suppliers" in the United States.

Without specifying the magnitude of increase, Advito expects average meetings demand to outpace transient travel demand next year, with "moderate meeting price increases in 2014."

Huge Airfare Hikes Elude Carriers 

Advito projects airlines in the United States and Europe to keep a lid on capacity growth in the face of "soft demand," likely forestalling "significant fare hikes" in 2014. Average fares for economy travel within North America are expected to grow 2 percent year over year, with average intercontinental North American business class fares projected to be up 1 percent year over year. Average intercontinental economy fares and regional business fares are forecast to be flat for the region.

While major European carriers face competitive headwinds from "low-cost carriers" within Europe and growth-hungry Middle Eastern carriers on some international routes, the European economy is clawing out from recent depths, according to Advito. That should help lift demand and shift average pricing slightly upward on the continent, ranging from a 1 percent year-over-year 2014 airfare increase for intra-Europe economy flights to a 2 percent increase in average intercontinental economy fares.

Advito projects the most aggressive airfare pricing pressure worldwide to come from the Latin America region, where average airfares are projected to be up by no more than 3 percent year over year.

Meanwhile, "over-capacity from the three Gulf carriers could drive down prices on many routes between Africa, Europe and Asia/Pacific," according to Advito. In Asia, Advito expects some relative bargains for business-class fares, which are projected to be down by 2 percent year over year on average for both short-haul and long-haul travel. Average economy fares in the region should be flat to slightly up year over year, varying by length of haul.

Hoteliers' Price Increases 'Likely' Less Than Advertised 

While hotel companies seek 2014 rate increases ranging from 4 percent to 6 percent on a global basis, they "likely will achieve only half that," according to Advito.

Yet, rate projections vary according to the supply and demand dynamics at the market level.

Advito envisions "strong negotiating opportunities" for buyers in smaller markets, while hotels in some major cities, including New York and Hong Kong, are positioned to extract average "double-digit rate increases" from corporate buyers year over year. The same goes for "under-supplied emerging destinations like São Paulo and Luanda" in Brazil and Angola, respectively.

In the United States, Advito expects average hotel rates to be up between 3 percent and 5 percent year over year. Europe, meanwhile, is forecast to see average rates slightly decrease in some markets in Ireland and the Czech Republic while increasing as much as 6 percent in Turkey. Most Western European countries should see modest average rate increases.

Average 2014 rates in China, Japan and South Korea are expected to range from flat to up by no more than 4 percent year over year, while the average rate in India will range from 1 percent up to 1 percent down.

As with airfares, Latin America is home to some of largest anticipated average hotel rate hikes, as much as 8 percent to 9 percent in some Brazilian and Argentinean markets.