Hotel rates in 2022 are expected to increase 13 percent globally year over year and a further 10 percent in 2023, according to the Global Business Travel Forecast published Wednesday by CWT and the Global Business Travel Association.
The seventh annual edition of the forecast also identified year-over-year airfare rises of 3.3 percent next year and 3.4 percent in 2023 and increases in ground transport costs of 3.9 percent in 2022 and an additional 3 percent in 2023.
The report attributed rising business travel costs to a number of factors including growing post-pandemic demand, capacity constraints, sustainability targets and increasing labor and fuel costs.
Macroeconomic forces, government policy and Covid-19 protocols will continue to impact future pricing, while global economic growth expectations – of 5.9 percent in 2021 and 4.9 percent in 2022 – will “help accelerate the recovery of business travel,” according to the report.
“While the best-case scenario for 2022 is for further recovery of business travel across all areas, not all markets, nor all categories, will recover at the same pace, so business travel managers will need to understand what to expect as we look at the year ahead,” said CWT chief executive officer Michelle McKinney Frymire in a statement.
The forecast is based on statistical models developed by GBTA and anonymized transaction data from CWT’s global client portfolio over the past 10 years. The organizations last issued the forecast in 2019.
Global hotel rates in 2020 collapsed 8.3 percent year over year and a further 17.7 percent in 2021, with prices as of the this quarter this year still down around 25 percent from 2019 levels. However, as travel recovery gathers pace, average rates globally are expected to rise 13 percent next year to $135.66, and a further 10 percent in 2023 to $149.25 – still down from 2019's average rate of $158.93.
In Europe, rates are expected to rise less steeply than the global average, increasing 10.4 percent year over year in 2022 (to $132.97) and 7.6 percent in 2023 (to $143.02). The average hotel rate in Europe in 2019 was $157.15.
Upscale hotels are expected to see higher occupancy levels—and therefore higher room rate—as business travel returns, while larger corporate meetings and events are expected to return in 2022 with average attendee numbers having dropped from 42 in 2019 to 24 in 2021.
Rising airfares are expected in the next two years (3.3 percent in 2022 and 3.4 percent in 2023) as airline capacity remains tight on its path back to pre-pandemic levels. As a result, business travelers will compete for limited capacity with leisure travelers, a setup that will continue to exert pressure on airfares, according to the report. If demand increases faster than capacity returns, price increases could outstrip the projected increases, it warns.
Car rental rates have been the least volatile of the key travel categories during the pandemic and only moderate rises are projected despite several challenges currently facing the sector, principally the limited supply of new vehicles.
Having dropped only 2 percent year over year in 2020 and recovered 1.2 percent this year, rental rates are expected to rise 3.9 percent in 2022 and an additional 3 percent in 2023.