Businesses can expect travel prices to continue to rise for the remainder of 2022 and throughout 2023, according to annual price forecasts from travel management company CWT and the Global Business Travel Association. (GBTA).
Factors such as rising fuel prices, staff shortages and inflation are likely to be the ‘main drivers’ of rising prices over the next 18 months, according to World Travel Forecast business 2023.
CWT forecasts airfares to increase by approximately 48.5% in 2022, followed by an 8.5% increase next year. Hotel rates are expected to increase by 18.5% this year and then by 8.2% in 2023.
Car rental prices are expected to see a smaller percentage increase in 2022 (7.3%) and 2023 (6.8%), but rental rates had already started to increase again in 2021 (up 5, 1%), unlike air travel and hotels, which still saw significant price declines last year.
Patrick Andersen, CEO of CWT, said business travel demand was “back strong” around the world and pointed out that these forecast prices were mostly “at the same level” as in 2019.
CWT said there were several “cautionary notes” that could impact its forecast, including higher inflation, the impact of war in Ukraine and the risk of further Covid-19 outbreaks causing travel restrictions.
Richard Johnson, senior director of CWT Solutions Group, told BTN Europe that the forecasts had been prepared with “significant due diligence”, including working with economists.
“We are confident that it is as robust as possible, given the level of uncertainty we face,” he added.
Johnson said the airfare increase was also likely to include more corporate bookings in premium airline cabins, which have fallen in percentage during the pandemic. The share of premium reservations fell to 4.5% in 2021 but rose to 6.2% in the first half of 2022.
He added that the percentage of premium flight bookings could return to the 7% figure of 2019 or even exceed this level over the period covered by the report.
Johnson said airfares and hotel rates rose due to “strong” demand for leisure travel “competing for available capacity.” It was also leading to a greater mix of leisure and business travel, for which hotels would have to adapt their facilities.
“The cost of labour, food, drink and energy will all drive up hotel rates,” Johnson predicted. “In the Americas and parts of Europe, rates are already higher [than before the pandemic].”
CWT said Europe is likely to experience “an uneven recovery” in hotel prices, with prices in the UK already above 2019 levels, but other major destinations, including Germany and France, “unlikely “to exceed pre-Covid rates due to the economic impact. of the Russian invasion of Ukraine.
Johnson added that companies that want their travelers to use electric vehicles while traveling could also start choosing hotels for their programs based on the presence of on-site charging facilities.
Car rental companies continue to suffer from capacity constraints due to the lack of new vehicles supplied amid the global microchip shortage.
Johnson said this meant rental companies were keeping cars in their fleets longer than normal, but it should “not create a worse experience” for travellers, provided service standards are maintained.
The report also looked at meeting and event costs. It projects the cost per attendee to increase by 25% this year compared to 2019, and then another 7% in 2023.
Johnson pointed to the huge return to in-person meetings and events in 2022, which are up 65% from last year. Meanwhile, virtual and hybrid events fell 70% year-over-year.
Part of this demand for physical meetings is fueled by the higher number of post-Covid teleworkers and the need for organizations to bring them together regularly by booking meeting spaces.