Intercontinental airfares will decline and hotel rate increases will stabilize in the third quarter, while domestic and regional airfares in the U.S. and Europe are on the rise, according to Advito's Travel Price Index, released this week.
The index, calculated by predictive analytics based on future shopping data, indicated a mixed performance in the various global regions on intercontinental airfares versus the third quarter of 2023. Economy fares, for example, are projected to be down year over year in three regions—8 percent in both Asia and the South Pacific and 5 percent in North America—flat in Latin America and up by 1 percent in both Africa and the Middle East and by 4 percent in Europe. Intercontinental business fares are projected to be down by 10 percent year over year in both Asia and the Southwest Pacific and up slightly in the other regions, according to the index.
The sharp projected drops in the Asia/Pacific region are "due [to] the rise of capacity and competition in the international market as airlines restore more routes," according to Advito.
In terms of quarter-over-quarter comparisons, however, intercontinental business class fares are trending downward in the third quarter in every region save Africa, where they are projected to be flat. Intercontinental economy fares are trending down or flat in every region except Europe, where they are trending upward, Advito projects.
On domestic fares, Advito noted that Europe and North America are seeing increases with "strong" demand and industry challenges affecting supply including "supply chain constraints and aircraft grounding." In North America, Advito projects business class domestic fares to be up 5 percent year over year and economy fares up 3 percent; in Europe, those increases are projected to be 2 percent and 7 percent, respectively.
For hotels, Advito projects a third-quarter global increase of 6 percent year over year in average daily rates, though it projects stable rates on a global basis quarter over quarter. By region, all regions save Asia are projected to have year-over-year ADR increases, with inflation and hotel operational costs driving the increases in many markets, Advito said.
Africa is projected to have the largest year-over-year increase, up 10 percent, followed by Europe and Latin America, both up 8 percent. North America is projected to have the smallest increase, up 3 percent, as Advito noted it is the only region in which year-to-date occupancy levels are not up year over year.
Advito also noted an "upward trend" in rail costs in Europe, which it said will be up an average of 6 percent year over year in the region. "The significant domestic capacity decrease from airlines [in Germany, the U.K. and France] and actions taken for more sustainable travel have strengthened rail demand," Advito said.