Corporate travel prices next
year could increase as much as 6 percent throughout the world, as rising demand
should help air, car and hotel suppliers secure rate increases, according to
Advito's 2012 forecast, released Thursday. The consulting arm of BCD Travel,
however, cautioned that weaker economic conditions could reverse pricing and
demand expectations, noting an increasingly pessimistic economic outlook.
For now, airlines have
demonstrated the ability to control capacity, capture rising demand and
concentrate power through consolidation and joint ventures, leading Advito to
predict 2012 airfares to grow between 3 percent and 5 percent year over year.
Increases vary by market and class of service and would build on this year's healthy
pricing and demand trends.
Meanwhile, hotels are
"bullish about their ability to raise rates in 2012," and buyers
should see rate increases between 2 percent and 6 percent, varying by market.
"Another year of double-digit increases is probable" in New York and
other "international gateway cities," Advito noted.
Even rental car suppliers
are expected to wield renewed pricing power with corporate clients, despite two
consecutive years of flat negotiated rates. Advito expects rental providers
next year will secure corporate rate increases of between 4 percent and 6
percent.
Noting a rebound in meetings
demand this year, Advito expects continued strength in the sector, forecasting
rate increases next year and further strength in 2013, "based on strong
forward bookings." Like with its hotel forecast, "rate rises will be
greatest in gateway cities," though no specific numbers were given.
European rail prices,
meanwhile, should increase next year by 5 percent, "similar to 2011,"
Advito projected.
A Strong Corporate Travel Market… So Far
"2011 has been a year
of steady growth for business travel, with both demand and prices up,"
Advito noted in the report. Overall demand is nearing pre-recession levels from
2008. Although airfares this year have surpassed those previous pricing peaks,
hotels still are digging out from the "severe" rate reductions of
2008 and 2009. Advito projected that hotel rates are not likely to exceed that
"high watermark until 2012 or even 2013."
Advito expects demand for
business travel next year to grow by low single-digit percentages in North
America and Europe, while other regions should see mid-to-high single-digit
growth in demand. Advito noted a particularly strong appetite for travel to
emerging markets, including Brazil, Russia, India and China.
Despite Growth Outlook, Fundamentals Are Shaky
Advito based its outlook
"on the provisional assumption that economic growth will continue in
2012," though concerns of a double-dip recession or anemic growth persist.
While upward travel demand trends have not yet reversed, "economic events
are moving rapidly," Advito noted.
Advito based economic
assumptions on the International Monetary Fund's June 2011 World Economic
Outlook Update, which projected "advanced economies," specifically
those in North America, Western Europe and Japan, to grow 2.2 percent this year
and an additional 2.6 percent in 2012. For the rest of the world, the IMF
growth forecast tops 6 percent this year and next.
Still, it is "highly
plausible" that IMF could downgrade its outlook in a forecast later this
month, Advito warned, as economic confidence wanes, debt crises afflict some
Eurozone countries and "poor indicators," including a volatile stock market,
plague the U.S. economic outlook.
"Demand for business
travel correlates directly with gross domestic product growth," Advito noted.