For corporate travel buyers, 2016 will be a year of higher
hotel rates, slightly higher airfares and flat car rental rates across most of
the globe, according to American Express Global Business Travel’s annual
Business Travel Forecast.
The forecast, mined from Amex GBT’s proprietary data and
data from third-party research sources, projects “modest increases in global
travel prices,” according to vice president of consulting Caroline Strachan,
who is departing Amex GBT at the end of the year. North American growth will be "healthy,"
while rate growth in Europe and the Asia/Pacific region will be moderate. Latin
America, meanwhile, will continue to struggle amid economic instability.
Hotel Rates
Amex GBT projects corporate travelers in North America will
pay as much as 6 percent higher for midprice and upscale hotels, as both transient
and group demand increases. “Momentum from 2015’s strong rate performance is
expected to carry on through 2016 as corporate travel managers continue to be
challenged in negotiating aggressive discounts,” according to the forecast.
“While a healthy pipeline of new construction is on the horizon, the impact
from added inventory is not likely to appear until after 2016.”
Increases in EMEA will be more moderate, upward of 3
percent, the largest rises coming in major cities where the weaker euro is boosting
tourism demand.
Corporate rates at midprice hotels in the Asia/Pacific
region will increase between 1.3 percent and 3.7 percent, and upscale hotels
rates will rise 1.6 percent to 4 percent. Amex GBT noted substantial rate hikes
in Sydney and Tokyo, owing to strong currencies and limited hotel supply, and
forecast smaller increases in India, owing to “lingering overcapacity.”
Even with generally weak economies in the region, “inflationary
pressures,” will boost hotel rates in Latin America. Stronger economies in the
region—Peru, Colombia and Mexico, which also has a “robust manufacturing
outlook and solid domestic consumption”—will see higher hotel rates.
Airfares
Airfare increases in North America will be slight, as rising
capacity offsets growing corporate demand, according to Amex GBT. Short-haul
economy fares will remain flat, owing to more competition from low-cost
carriers. Long-haul economy fares will increase between 0.7 percent and 2.7
percent. Business class fares will rise slightly on both short- and long-haul
routes.
Fares in Europe, the Middle East and Africa will be
“relatively stable” in 2016, though business class fares should increase
slightly. In the Middle East, fares other than long-haul premium class should
drop, owing to “rapid capacity growth by Gulf carriers and lingering weakness
in the region’s oil-based economies.”
In the Asia/Pacific region, airfare increases will be
moderate. Domestic economy fares will experience the largest increases, ranging
from 2 percent to 3.5 percent. They'll rise especially in India, as “its booming
economy and poor ground infrastructure combine to push more travelers to
solicit air options,” according to Amex GBT.
Both business class and economy class airfares will decrease
in Latin America, where economies are struggling, though consolidation among
carriers in the region will mitigate that.
Car Rental Rates
Car rental base rates across the globe should remain flat in
2016, according to the forecast.
In North America, the rental market will see limited growth
in 2016, owing in part to ridesharing's increasing market share. Even so,
buyers could witness higher overall prices, owing to rising ancillary costs,
and companies without the volume to negotiate rates will bear the brunt of the
increases.
Similarly, car rental base rates in EMEA will dip in 2016 on
“increased competition and growing demand for smaller, more fuel-efficient
vehicles,” but overall prices will be higher on increased ancillary fees.
Latin America car rental base rates also will be flat in
2016 as the major car rental companies in the region see pressure from new
local suppliers.