Global price increases for corporate travel will be
"subdued" next year as the industry contends with a host of issues
causing uncertainty, including Brexit, a slowing Chinese economy, low oil
prices and populist political movements, according to American Express Global Business
Travel's 2017 forecast.
Despite record-high demands for air travel, the global
airline market remains fiercely competitive, which, coupled with low fuel
costs, should prevent sharp increases in airfares. Both hotels and ground
transportation pricing will remain flat on a global scale, according to the
forecast. Of course, pricing will vary significantly by region.
The Americas
Overcapacity and significant competition between legacy and
low-cost carriers should bring average fares down in both the United States and
Canada. Similarly, overcapacity and political challenges will bring down
airfares in Brazil and Argentina, while stronger economic outlooks in Chile and
Mexico could increase fares there.
U.S. hotel rates will increase 3.6 percent. The moderate
projection, compared with past years, owes to new hotel supply. Rates will decrease
across much of Latin America, meanwhile, due to lower demand.
"Excessive fleet sizes and strong competition among the
major suppliers" will keep U.S. car rental rates flat in 2017, according
to the forecast, and rates in Canada and Latin America will decline.
Brexit Concerns
The U.K. market has recovered after the initial slide that
followed June's Brexit referendum, and while spending has maintained, U.K.
companies' near-term investment in their businesses plummeted in the third
quarter, suggesting economic weakness is coming, according to the Global
Business Travel Association. Brexit may be delaying short-term economic
decisions and still also may prove to have a long-term impact on trade jobs,
immigration and investment. All of that will challenge business travel levels
in the coming years.
"The
end of Open Skies for European air carriers may result in fewer flights and
higher fares, and reinstituting mobile roaming charges could expose road
warriors to rising voice and data communication costs," according to the GBTA BTI Outlook—Western Europe report.
Additionally, airlines may have to renegotiate routes and gates, which, again,
could lead to fewer flights and higher fares, not to mention credit card
complications. Meanwhile, business travelers could have a harder time moving
throughout the European Union if new visa requirements prove extreme—and if they're
reciprocated throughout the EU.
EMEA
Amex GBT projects airfares in Europe, the Middle East and
Africa will remain flat amid economic weakness, security concerns and growing
competition from Gulf carriers on long-haul routes and increasing competition
from low-cost carriers on short-haul routes. Hotels, meanwhile, will increase
rates slightly, considering low levels of supply growth. Car rental rate
increases will be small.
The travel impact of the United Kingdom's vote to leave the
European Union remains unclear. For now, it has made outbound travel from the
United Kingdom more expensive vis-à-vis a weakening currency, but the long-term
impacts should become more clear when negotiations for the exit begin in the
second quarter of next year, according to Amex.
Asia/Pacific
While the region is enjoying high demand and political stability,
overcapacity will keep airfares flat across Asia/Pacific. Fares could increase
slightly on certain routes and fare classes, though. For example, domestic
routes in China are forecast to increase 1.5 percent year over year, and
international routes from India are projected to increase by the same level.
Hotel
rate growth will vary across the region. Rates will increase modestly in areas
with significant supply growth, such as China and India, while markets with
limited supply growth—Tokyo and Sydney, for example—will see larger increases.