Egencia predicted both global airfares and
hotel rates in 2013 will increase modestly year over year, broadly in line with
recent forecasts issued by Carlson Wagonlit Travel and Advito. According to
Egencia's forecast, airfares will rise 5 percent in North America, 3 percent in
Europe and 5 percent in the Asia/Pacific region, while hotel rates will
increase 3 percent in North America, 2 percent in Europe and 1 percent in Asia/Pacific.
The main difference between the Egencia and CWT
forecasts is that the latter predicted fares to rise only 2.5 percent to 2.8 percent
across all three regions. The Advito forecast departs from the other two most
significantly in predicting considerably higher hotel rates in North America (6
percent to 7 percent) and Asia/Pacific (5 percent to 8 percent).
According to Egencia, "demand for air
travel has held up remarkably well so far in 2012." The travel management
company predicted continuing, though slowing, demand growth in every region in 2013.
Instead, the principal determinant of price, so far as Egencia is concerned, would
be variations on the supply side. In North America, capacity growth has been
highly disciplined following recent airline consolidations, which Egencia cited
in predicting fare increases of as much as 5 percent. More specifically,
Egencia indicated capacity again would fall in Los Angeles, San Francisco,
Houston and Philadelphia, leading to fare rises of, for example, 9 percent in
Los Angeles and 7 percent in Philadelphia.
In Europe, capacity growth also has been
limited, but Egencia noted the impulse to raise fares is tempered by a strong
challenge for the business market from easyJet and on long-haul routes from the
three dominant Middle Eastern carriers: Emirates, Etihad and Qatar Airways.
Once again, however, fares will rise the most in markets where capacity has been
reduced, most notably Amsterdam, Frankfurt, Paris and Madrid, with 2013 fares all
up 4 percent to 7 percent, according to Egencia. Conversely, Egencia indicated capacity
will increase substantially in Moscow, Manchester and Brussels, and therefore
fares in those markets will remain flat or rise only by very small amounts.
The sharpest fare increases in Asia/Pacific
will be in India, with Mumbai and Delhi up 10 percent and 9 percent
respectively, according to Egencia. In these cases, the fare rises will be
driven not only by limitations on capacity growth but higher fuel costs and
drastically increased airport charges for carriers.
The report also analyzed the opportunities to
save money through advance ticket purchases of at least 21 days before travel.
Based on average savings realized between January 2011 and August 2012, by far
the greatest opportunities are in Europe. Atop the list is advance fares from Frankfurt,
with an average saving of 51 percent. For most other European cities the
discount is at least 40 percent, with Brussels and Moscow the back-markers on
28 percent.
In North America, the best advance purchase
savings opportunities are to be found in Toronto and Houston (both 30 percent),
according to Egencia, but several cities are only in the teens, including Los
Angeles (13 percent) and New York (17 percent). Opportunities are even more
limited in Asia/Pacific. Although Hong Kong and Melbourne both are 20 percent,
Mumbai is zero, Delhi 1 percent and Singapore 8 percent.
Egencia's report includes negotiating tips for
2013. These include committing only to deals that buyers can be confident of
meeting, negotiating such soft benefits as waived bag fees, and—unsurprisingly—encouraging
early booking.
Egencia also predicted that severely limited
hotel capacity growth, especially in North America, will narrowly outweigh
sluggish demand growth to produce small rate rises in 2013. However, there will
be rate hotspots in every region. In North America, the steepest average daily
rate increases are tipped to include San Francisco (12 percent) and Boston (8 percent).
The report warned buyers that they face severe challenges
in the region. "Hoteliers expect to realize significant corporate
negotiated rate increases in 2013, and consequently negotiations are expected
to be a lot tougher than in the past few years," it said. "While
pricing power has shifted slightly in the hotels' favor, buyers should still
negotiate hard to keep price increases contained."
Egencia forecasts significant hotel rate
variations in Europe. Average rates in Dublin and Munich will witness the sharpest
rises (both up 10 percent), and Paris' average rate will rise 7 percent, but in
London it will be flat (and fall slightly in other U.K. cities), while several
property openings in Moscow will push the average rate down 2 percent. Asia/Pacific
will experience an even larger number of rate decreases, including in Delhi and
Shanghai (both down 5 percent) and Mumbai (down 2) percent. However, Hong Kong's
average rate once again will climb sharply (up 9 percent), and Sydney's will rise
5 percent.
Egencia urged clients to find the right balance
in their hotel programs between too many and too few properties. As a rule of
thumb, it indicated, there should be one property per city for every 500 room
nights or $10,000 of spend.