Corporate travel buyers should expect higher airfares and hotel rates in 2015, although car rental prices should remain steady, according to a forecast issued on Tuesday by Carlson Wagonlit Travel and the Global Business Travel Association Foundation.
Overall, the 2015 Global Travel Price Outlook projects next year's global business travel spending levels to be 8.6 percent higher than this year's volume. Expanding emerging markets and a release of "pent-up demand" as mature economies recover will spur that growth, according to the report.
Globally, airfares in 2015 will increase 2.2 percent year over year, with accelerating demand outpacing slowly increasing capacity, according to the forecast.
Latin America will have the largest percentage airfare increase (3.5 percent) as airlines return capacity to normal levels following this year's increases in capacity to Brazil to accommodate World Cup demand. Airfares in Brazil will be up 3.5 percent and as much as 7 percent in Argentina and Venezuela, both of which are experiencing "runaway inflation," according to the forecast.
The forecast projects airfares in North America will be up 2.5 percent amid "plummeting capacity" following the US Airways-American Airlines merger and the Delta Air Lines and Virgin Atlantic joint venture. U.S. airfares will be up 3 percent, and fares in Canada will be up 1.5 percent.
Asia/Pacific airfares, meanwhile, will increase about 0.5 percent, as low-cost carriers grow capacity in the region and legacy carriers' pricing power weakens, according to the forecast. China in particular will see airfares moderate as its domestic economy slows, high-speed rail access between regional cities grows and completion improves due to "recent reforms and the liberalization of" global distribution systems, according to the forecast. India, on the other hand, could see airfare increases of 4.4 percent "on the heels of recent elections and prospects for market reforms that could lead to greater levels of business activity and a higher volume of business travel."
Airfares in Europe, the Middle East and Africa will be up 1 percent, with stronger increases in the Middle East and Africa and little growth in Eastern Europe, according to the forecast.
The report projects average daily hotel rates globally to increase 2.6 percent, as hotel operators are "in a better negotiating position than they have been in quite some time."
Strengthening demand in the United States should push its average hotel rates up 4.5 percent in 2015, according to the report. San Francisco and Houston stand to see the largest increases. Canadian hotels will see a more modest ADR increase of 1 percent.
In aggregate, the forecast projects Western Europe ADR will increase 1 percent, with rates up significantly in London amid limited supply, and more moderately in Germany, which is experiencing a growth in room supply. Eastern Europe, which saw ADR decline year over year in 2012 and 2013, is beginning to recover as bargain-seeking meeting planners explore options there, and Middle East and Africa rates also will "grow modestly for the fourth year in a row," according to the report.
The forecast projects Asia/Pacific hotel ADR will be up 2.7 percent in 2015, with stronger increases in Indonesia (up 7.8 percent) and Australia (up 3.6 percent). ADR in China, however, will be about flat, as the country experiences an "extraordinary growth in supply."
Among the four global regions, Latin America will have the largest ADR increase of 6.3 percent, according to the forecast. This includes significant increases in inflation-troubled Venezuela (up 17.5 percent) and Argentina (up 11.5 percent) as well as increases for Brazil (up 11 percent), Colombia (up 5 percent) and Chile (up 4 percent). The forecast projects ADR in Mexico will be about flat as supply grows and demand wanes.
Rental car prices globally will remain flat in 2015, according to the forecast. Despite pricing power in a few markets this year, car rental companies generally have been able to reduce fleet sizes to align with demand, the forecast indicated. Latin America will be an exception to that trend, with rental car rates projected to grow 2 percent "based on generally high travel demand throughout the region."