Resilient corporate demand, particularly in premium classes, and carriers' capacity discipline in the face of high fuel prices will work to keep fourth-quarter airfares elevated, according to a new analysis by travel consultancy Advito. Hotel rate inflation should cool, Advito noted, but markets will diverge considerably.
International business-class fares are projected to rise at least 5 percent year over year in every area of the world, according to Advito, in some cases far beyond increases in economy-class fares.
"Premium cabins are likely to experience the greatest pricing pressure as corporate demand continues to outperform expectations, while economy fares should remain more stable in highly competitive short-haul markets," according to Advito multimodal managing consultant Lucila Rodaro, writing in Advito's Q4 Travel Price Index.
Carriers, meanwhile, remain capacity-disciplined amid elevated fuel prices, according to Rodaro, targeting pricier premium-class demand.
"Many international carriers have yet to fully restore long-haul capacity, while fleet availability and operational constraints continue to limit growth in key markets," Rodaro wrote. "As a result, airlines remain focused on profitability over expansion, carefully managing capacity and prioritizing higher-yield traffic."
Advito projects international and domestic business-class fares to increase 6 percent and 5 percent year over year, respectively, in North America, and 6 percent and 3 percent in Europe.
Advito highlighted the outbound North America to Europe international market, Q4 business-class airfares on which it projects to increase 7 percent year over year while economy fares increase 2 percent. Calling the North Atlantic "one of the healthiest long-haul travel markets globally," Advito noted carriers "continue to report strong premium demand between major business hubs such as New York, London, Paris and Frankfurt, helping maintain strong yields and supporting higher average fares paid despite broader economic uncertainty."
Advito said it uses predictive analytics to produce airfare calculations based on fare availability for the fourth quarter in global distribution systems, using August searches.
Lodging: Considerable Variance
Hotel pricing in fourth quarter, meanwhile, appears set to be all over the map, per Advito. While the consultancy projects an average global 3.9 percent increase year over year in fourth-quarter average daily rate, that figure should vary considerable by location.
"Latin America and Southwest Pacific sit well above the global result, Europe remains firmly positive, and Asia and the Middle East move into negative territory," according to Advito. "For buyers, the geographic mix of travel will matter more than global headlines."
In the United States, Advito projects Q4 ADR to increase 2.9 percent year over year, lower than the 5.8 percent it projected for the third quarter. That said, the consultancy warned corporate buyers may find increases higher than its projected average.
"Rate growth is increasingly concentrated in upper-tier hotels where business transient and group demand remain strong," said Advito of the United States. "Limited new supply could further amplify increases in corporate-heavy and convention markets."
Advito also noted that although it projects Q4 ADR in India to decrease 3.5 percent year over year, the corporate bids it is receiving for 2027 are trending 12 percent to 15 percent higher.
"With hotel demand and pricing fundamentals remaining strong, buyers should be cautious about interpreting Q4 softness as the start of a broader rate correction," the consultancy noted.
Advito said its hotel projections were based on predictive analytics around flexible best available rates available in GDSs and online travel agencies for the fourth quarter.
Modest Rail, Car Growth
Advito suggested fourth-quarter rail prices generally would increase up to 4 percent year over year in Europe amid strong demand and, in some markets, competition. In the United States, rail prices are forecast to increase 5 percent year over year "with record ridership levels sustaining upward pressure on fares," though increasing capacity is helping to moderate rates.
Advito projects Q4 U.S. car rental rates in the United States to increase 1 percent year over year with demand growth "modest."