After several months of elevated travel prices, especially in the months after the outbreak of war in the Middle East, some softening in business travel demand could blunt the price-hike momentum, according to the Global Business Travel Association and travel management company Altour. But supply constraints and suppliers' steps to protect prices should prevent them from slipping too far, officials said.
GBTA and Altour issued their pricing forecast late last month, projecting moderating—but still rising—year-over-year price increases for air travel and hotel stays into 2027, along with slight softening in car rental rates next year.
At GBTA's annual convention in Chicago this month, Altour SVP and chief commercial officer Michael Boult and Shawn DuBravac, president and CEO of Avrio Institute, which developed the forecasts used by GBTA and Altour, suggested buyers might be prevented from realizing significant savings even in the case of slowing price hikes.
Additionally, they noted some signs that business travel transaction volume may be beginning to slow. There have been some hints of this: Marriott International this month noted "slight declines in room nights" year over year in the business travel sector in Q2, and IHG Hotels & Resorts reported first-half business transient revenue growth driven entirely by rate hikes. (Arguable evidence on the other side include consistent year-over-year gains in sales by corporate travel agencies and settled by Airlines Reporting Corp.)
Boult, though, suggested that business travel transactions have started to decline year over year. "We're in the uh-oh zone now, "he said. "Now it looks like we're seeing declines in transactions, so people are traveling less."
Those transaction declines, he said, could be a harbinger of slower demand throughout the remainder of the year in the face of high prices.
"It'll be really interesting to see what happens in September and October, big travel months," Boult said, noting that business travel traditionally has been less sensitive to pricing swings than leisure travel, given employers' openness to paying what is necessary to conduct business. "We're going to test that now, I think, in the balance of the year," he said.
Capacity Check
In contrast to Europe, where the prevalence of low-cost carriers helps to counter airfare increases, Boult said, U.S. carriers don't have that structural check, especially after the death of Spirit Airlines. As such, U.S. airlines have a free hand to drive fares, he said, and have limited capacity in 2026 amid oil price hikes.
"Because they've constrained capacity somewhat, they have a little greater pricing power," DuBravac said. "I think that is a defining theme as we move in back half of 2026 and into 2027: What does that capacity constraint look like for carriers? Do they try to grow capacity to try to drive growth? And if so, does that compress pricing? Or do they keep capacity tight in order to keep prices higher so that they can offset higher fuel costs?"
Boult also noted the increasing role of loyalty programs not only in airlines' capacity and pricing strategies but also in their bottom lines, with point sales a key revenue generator. "The industry is changing profoundly," he said.
"If demand were to start to wane in the back half of the year, historically you respond to slower demand by cutting fares," DuBravac added. "But you could also look at changing redemption rates or offer bonuses on redemptions." High levels of point redemption "drives up your load factors. And then all of a sudden you've got a tight airline, you've got tight capacity, so you don't need to lower fares as a result."
As such, DuBravac said, "I think that's one of dynamics that is going to keep fares higher, certainly through this year, but even in the next year."
Hotel Forces
U.S. hoteliers in large part have enjoyed a banner 2026, due in part to the FIFA World Cup, and several forecasters, including CoStar and CBRE, have adjusted their projections accordingly. But it's a surge based less on pure demand—international inbound travelers to the U.S. declined in the first six months of the year, DuBravac said, despite the World Cup—than on rate, as Marriott and IHG executives acknowledged.
"We're going to set all-time highs for average fares for business travelers," DuBravac said, but noted "occupancy rates have increased just a little bit year over year through the first six months of the year, but we're still well below where we were in 2018. And part of what drove the rates that we saw in 2018 was the high occupancy levels. That's not the case this year."
Altour and GBTA project 2026 hotel rates to rise overall throughout the world—3.7 percent year over year—but with significant regional variation, including 1.5 percent year over year in North America.
DuBravac noted that the Avrio projection is "a little more aggressive" than some other forecasters and cited what he called limited supply.
"We think that there remains a lot of capacity constraint," DuBravac said. "The number of hotel rooms in construction is almost 50 percent below where it was in 2019. That growth rate for new rooms is pretty slow. We're in the low single digits for the next couple of years. Most of that is in pre-planning and pre-production, so it's easy to cancel that out. And so you're going to have constraints there in capacity as well, which I think will lift prices this year."
Car Rental Perspectives
Like their airline brethren, car rental companies have spent the past few years keeping a lid on their fleet, with little evidence of a change on in strategy. Avis Budget Group, for example, last month said it would further reduce its fleet by 5 percent.
"We've seen car rental organizations [keep] their inventory low in order to keep capacity tight, to keep the rates up," DuBravac said. "So there's been very good fleet discipline in the market."
Meanwhile, Avrio's analysis of Chicago transactions showed ride-hailing prices have increased in recent years while taxi fares declined. On a per-mile basis, ride-hailing now costs slightly more than taxis there, DuBravac said.