MINNEAPOLIS – Global air, land and hotel travel fares are expected to increase over the next two years, mainly due to growing demand, capacity constraints and sustainability requirements from travelers, as well as rising labor costs – Work and fuel, according to the seventh annual Global Business Travel Forecast released today by CWT and the Global Business Travel Association (GBTA).
Released today by GBTA, the voice of the global business travel industry, and CWT, the B2B4E travel management platform – the 2022 global business travel forecast uses anonymized data generated by CWT and GBTA, with publicly available industry information and econometric and statistical modeling developed by the Avrio Institute.
âAs we look to the recovery, information and data will be essential to enable the business travel industry to navigate what is likely to be a dynamic year ahead,â said Suzanne Neufang, Executive Director of GBTA. “This forecast is designed to help business travel buyers build and budget for their 2022 travel plans with an informed summary of how the global pandemic has influenced prices in 2021, as well as a detailed look at macroeconomic factors that will affect prices in 2022. “
The global economy is expected to grow 5.9% in 2021, followed by 4.9% in 2022, which means growth for business travel. However, several uncertainties remain on the periphery that could influence the macroeconomic outlook and the global travel economy.
Macroeconomic forces, government policy and COVID protocols will continue to impact future prices more than ever. As with previous industry disruptions, many travelers will not return immediately, and the business traveler may find themselves in price competition with the leisure traveler – who is leading the recovery and is willing to pay higher prices. high on the main routes and destinations in the city.
While macroeconomic challenges remain acute, growth expectations for the global economy between 2022 and 2023 will help accelerate the recovery in business travel. Factors such as a pick-up in demand, capacity constraints, rising labor and fuel costs will drive up prices globally in air, hotel and ground transportation. Despite these anticipated increases, rates for business travel, other than ground transportation, are unlikely to exceed 2019 rates over the next two years.
After increasing 2.6% in 2019, air fares fell 3.1% in 2020 and a further 31% for business travelers, driven by a 38% drop in premium class, followed by a drop of 38% in premium class. economy class tickets drop nearly 19% in 2021. However, air fares are expected to increase 3.3% in 2022, and 3.4% in 2023.
Airline capacity remains limited and is unlikely to return to pre-pandemic levels before 2023 or 2024. As a result, business travelers compete for limited capacity with leisure travelers. This will continue to put pressure on airline ticket prices in 2022 as they move with demand. If demand increases faster than capacity returns, price increases could exceed these expected increases.
Premium fares are expected to start increasing in 2023 as demand normalizes, while economy fares, particularly on domestic routes, will continue to benefit from large increases in leisure traffic through 2022.
Domestic leisure destinations will continue to lead the recovery in 2022, and as urban centers with high corporate traffic will take longer to recover, higher immunization levels are expected to boost confidence among business travelers.
Rising oil prices increase operating costs and will continue to put upward pressure on fares as airlines seek to improve profitability metrics.
After rising 3.5% in 2019, hotel prices are down 8.3% in 2020 and a further 17.7% in 2021, with prices in the third quarter of 2021 being down about 25% from at 2019 levels.
Although hotel prices are expected to increase 13% worldwide in 2022, followed by an additional 10% in 2023, it will take some time to return to 2019 levels in many markets. As borders open up for non-essential travel, occupancy rates will increase, putting upward pressure on prices and 2022 will see a push in that direction.
Upscale hotels are expected to experience higher occupancy rates and room rates as business travel gains momentum. However, with higher global labor and operating costs and supply chain disruptions likely to continue, firming hotel prices to 2019 levels may fluctuate until these factors become more consistent.
Corporate meetings and events will also have an impact on hotel prices, and CWT Meetings & Events expects the bulk of immediate meeting bookings to be small and regional. Virtual and hybrid meetings played a prominent role in 2021, while the overall size of live meetings grew from an average of 42 participants per meeting in 2019 and 2020, to an average of 24 participants in 2021.
Many organizations seem to choose smaller regional meetings, as opposed to larger events involving travel at the present time, however, as restrictions are lifted and pent-up demand results in more people traveling for more. meetings, which is expected to change in 2022. Demand for meetings and events increased by 53% for the first half of 2022 from 2021.
Global car rental prices fell 2% in 2020 and rebounded 1.2% in 2021, with prices set to rise 3.9% in 2022, and an additional 3.0% in 2023.
The tight supply of new vehicles, combined with an increase in demand for rental vehicles, will drive prices higher in the short to medium term.
Suppliers are looking to update their fleets urgently, but with a shortage in the used car market and issues with global automotive manufacturing due to the shortage of solid-state computer chips, it is unlikely. that the fleets be fully reconstituted before 2023.
The supply of electric vehicles will also be crucial over the next three years, with sustainability a key priority for employers and employees. Some providers are already making progress towards electrifying their fleets, building their own charging infrastructure, and adding hybrid and electric vehicle reservations to transfer and limousine services.
Climate-conscious travelers can also choose the train over the growing number of car rentals (and short-haul flights). France has already decided to ban domestic flights on routes that can be covered by train in two and a half hours, and returning business travelers are more aware of their end-to-end travel time – as well as the possibility of working on the train which is obviously not possible when renting a vehicle.
For more information, please see the report online. You can also download a PDF version of the 29-page report.
About Global Business Travel Forecast 2022
The projections for the 2022 global business travel forecast involved:
- Statistical models developed by GBTA
- Evaluation of historical price behavior and forecasts on airline, hotel and land categories by research, strategy and market and economic studies firm, Avrio Institute
- CWT’s market specific expertise and industry knowledge
- Information from the Research Department of the International Monetary Fund, IATA, the World Travel and Tourism Council, the United Nations and other leading organizations
The projections are based on anonymized transaction data from CWT’s global customer portfolio, including anonymized customer travel patterns, over the past ten years. Key and country-specific macroeconomic indicators, such as current and expected GDP growth, consumer price index, unemployment rates and crude oil prices, were used in the statistical model, along with the main supply drivers from OAG and STR Global. All airline statistics represent the point of origin and include all types of travel.
Learn more about the 2022 global business travel forecast and upcoming 2022 pricing plans and trends during a training session at the GBTA Convention 2021 (Room W415) on Wednesday, November 17, 2021 at 11:15 am ( Eastern Time).
The Global Business Travel Association (GBTA) is the world’s largest business travel and meeting organization representing the $ 1.4 trillion business travel industry. With operations on four continents, GBTA members manage more than $ 345 billion in global business travel and meeting expenses each year. GBTA provides world-class training, professional development, events, research, advocacy and media to a growing global network of over 28,000 travel professionals and 125,000 active contacts. Visit www.gbta.org and follow us on LinkedIn, YouTube, Twitter and Facebook.