The outlook for international business travel in 2018 is ‘bright’ says American Express Global Business Travel (GBT), particularly in Asia driven by China and India. Demand for business travel started to rebound in 2017, and is expected to continue, with some notable gains expected in Europe and Asia. China and India’s high-powered economies once again lead the way. However, prices will see only marginal gains, as suppliers rapidly increase capacity to meet demand as they compete for market share.
In its annual report, the Global Business Travel Forecast 2018 which forecasts industry rates for hotel, air and ground across the Americas, EMEA and APAC markets, GBT explores how demand is being driven by a steadily improving global economy and growing confidence among the business and investor communities.
Global highlights include:
- Hotel prices and airfares “should see upward movement” due to the economic strength. The large influx of new supply in many regions will help limit rate increases, with only slight to moderate growth expected globally;
- General optimism is tempered by lingering concerns over oil prices, security threats, protectionist policy, China’s economic rebalancing, and continued political instability in areas around the globe;
- Air travel demand is rapidly expanding. Fares are expected to rise in every region, although overcapacity on some routes, aggressive expansion by LCCs, and historically low oil prices should keep price increases in check;
- While only modest fare increases are expected, airlines will continue to drive revenues through the expanded use of ancillary fees (USD82.2 billion collected in 2017);
- Other key air travel trends for 2018 include the increased use of unbundled fares by mainline carriers to better compete with LCCs and the broader adoption of premium economy seating as a means of bridging the widening gap between economy and business class products;
GBT GM and SVP North America David Reimer believes these developments will allow travel managers to focus on the traveller experience rather than cost in 2018. Mr Reimer said: “In this time of economic rally, travel managers should aim to provide business travellers with the tools and services that will not only ensure satisfaction, but also encourage compliance and mitigate undue risks,” he said. “Business travel is a crucial driver of growth, and now is the opportunity to reaffirm commitment to it with more strategic and traveller-considerate planning.”
North America: Greater focus by US carriers on their domestic networks should create a competitive environment that helps limit pricing increases on economy class fares. Stronger corporate demand on international routes should result in moderate gains on premium fares, however, pricing for economy fares will decline;
Latin America: Air prospects are improving as deregulation and stronger economic activity begin to revitalise the region’s airline industry. Modest fare increases are expected across the board;
Europe: Airlines continue to face significant headwinds in the form of lackluster economic performance, long-haul pressure from Gulf carriers and intense competition from low-cost carriers on short-haul traffic;
Asia Pacific: Region forecast to see limited price increases, depending on route and fare class, as rapidly growing supply, particularly in China and India, is surpassed by even faster growing demand.