Worldwide travel prices in 2014 again should increase
moderately "in line with limited economic growth," according to
Carlson Wagonlit Travel's 2014 Travel Price Forecast, released Tuesday. The
travel management company expects average 2014 U.S. hotel rates to rise by
nearly 5 percent and U.S. airfares and car rental rates to increase as much as 1.2
percent and 1.3 percent, respectively. Certain Latin American and Asia/Pacific countries
are forecasted to experience even higher increases in all four evaluated
categories: airfares, hotel rates, ground transportation costs and per-attendee
meetings costs.
"While we expect moderate price increases worldwide
next year, there are some notable exceptions," according to Christophe
Renard, vice president of CWT Solutions Group. "Prices in Europe are
likely to decrease because of continued economic uncertainty in the region,
while emerging markets, such as Argentina, could experience far higher increases
in 2014 due to high projected GDP growth and significant inflationary
increases."
Airfares Rising
CWT cited several factors for the modest U.S. 2014 airfare
forecast, including a demand reduction from the U.S. government due to
across-the-board sequestration spending cuts.
Higher increases in airfares are predicted for the rest of
the world, with rises of up to 4 percent each for Latin America and the Asia/Pacific
region. CWT forecasts Argentina and Venezuela to see airfare increases of up to
13 percent and 8 percent, respectively. China is predicted to experience as
much as a 7 percent increase. Airfares in Europe, Middle East and Africa could
rise by as much as 3.1 percent, with Russia forecasted to see an increase of up
to 8 percent.
Citing the impact of airline consolidation, CWT recommended
buyers consider adding or expanding the use of low-cost carriers and product
offerings targeted at business travelers. "Buyers should work with their
suppliers to maximize opportunity offered by these situations, and may also
need to be prepared to shift volume to previously unused carriers following a
merger," according to CWT.
Sharp Hotel Rate
Increases In Some Destinations
While CWT predicts 2014 European hotel rates to range between
a 2.5 percent year-over-year decrease and a 1.6 percent increase due to
economic uncertainty, hotels in some key business destinations in other regions
will have their "highest rate increases in decades," as hotels will
operate at near capacity.
Hotels in North America could see rates increase as much as
3.9 percent rate, with rates in the United States rising by up to 4.9 percent.
However, rates in New York City may soften slightly due to "a return to
small increases in new hotel construction," according to CWT.
CWT projects the 2014 average hotel rate to increase by as
much as 5.8 percent in Latin America, the highest of any region, and up to 4.9
percent in the Asia/Pacific region. The projected rate increase in Venezuela,
as much as 16 percent, is the highest of any country in CWT's forecast. The
forecast for Brazil of up to an 8.4 percent in average daily rate is due partly
to the country's role as host of the 2014 FIFA World Cup.
CWT recommended travel buyers encourage travelers to join
hotel loyalty programs, noting that hotels this year more often are offering members
free Internet access. This would allow buyers to "focus their amenity
negotiations on breakfast." Meanwhile, "the industry is moving toward
the trends of including a fifth season in corporate contracts when possible,
and/or providing ‘fair rates' during blackout dates," according to the
report. "Buyers should anticipate higher rates as a result and should
proactively consider this when negotiating the overall contract."
First U.S. Car Rental
Rate Hikes In Years
CWT forecasts fleet cost increases to drive up 2014 North
American car rental rates by up to 2 percent year over year, marking the "first
time in years that U.S. suppliers have been able to increase rates."
Car rental rates in 2014 are forecast to increase as much as
5.5 percent in the Asia/Pacific region and up to 3.6 percent in Latin America. Car
rental rate increases will vary across Europe, according to CWT. While rates could
increase up to 4 percent in Russia, Germany and the United Kingdom, they could
drop as much as 4 percent in Spain and 1.2 percent in Italy.
CWT noted that car rental industry consolidation, including
the acquisition of Dollar Thrifty by Hertz, "has created more global
options for multinational and global travel programs, and more price and
service options available by working with a single supplier." As such,
according to the report, "car rental need not be negotiated annually,
[though] buyers should take their programs out to bid every two years to ensure
their agreements remain competitive."
Per-Attendee Meetings
Costs On The Rise Worldwide
Meetings suppliers in 2014 will raise prices, according to
CWT, resulting in most regions in "across-the-board increases" in
daily per-attendee costs. "This could prompt, in many cases, meeting
planners to maintain or even cut group size compared to 2013," according
to the report.
Meeting space demand in North America "continues to
outstrip supply," according to CWT, which expects 2014 group sizes to rise
by up to 1.5 percent, prompting a 5.5 percent rise in daily per-attendee costs.
CWT projects 2014 per-attendee daily meeting costs to
increase 4 percent to 7 percent in Latin America and 4 percent to 5 percent in
Asia/Pacific.
Due to ongoing economic concerns in Europe, CWT expects per-attendee
costs to remain about flat as suppliers reduce prices to stimulate demand and
attendee numbers drop by as much as 3 percent.
CWT indicated that to create the forecasts, it used a
statistical model from the University of California in Los Angeles that
evaluates historical price behavior and forecasts future price references,
along with macroeconomic information sourced from IHS Global Insight, the
International Monetary Fund Research Department, the United Nations and others.
CWT calculated projections based on client transaction data from the last six
years.