After slowing in 2019, global economic growth will stabilise at +2.8% in 2020, says BCD Travel in its recently released ‘2020 Industry Forecast‘. But the prospects for advanced economies and emerging markets are quite different. The performance of the North American economy will continue to weaken, but emerging regions, including Africa, Latin America and the Middle East, can expect growth to strengthen.
“A single issue dominates economic fears: trade wars. As growth slows, more countries could become increasingly protectionist, making matters worse,” it says. It is clear that as we approach 2020, corporate travel buyers face the prospect of a slow-down in advanced economies, while the performance of emerging markets improves. “We believe this will restore the traditional growth gap that had recently narrowed between mature and emerging markets,” says Mike Eggleton, director of research and intelligence at BCD Travel.
The economic landscape, oil price stability are key drivers behind BCD Travel’s forecast that predicts global hotel rates could increase by between +1% and +3% and air fares could rise between +1% and +2% in 2020, but notable regional and market segment variations remain.
The forecast predicts global hotel rates will increase by +1% to +3% in 2020, as “solid demand keeps occupancy high”. Average daily rates (ADR) will stay within this range in most regions. Rate increases will be higher in Asia, averaging +2% to +4%, as “hotel openings fail to keep up with demand”.
It expects the highest rate rises in Japan, host of the Olympics Games in 2020, and Vietnam, where both leisure and business travel demand is strong. Latin America is predicted to will see the lowest rise in ADR, averaging 0% to +2%, as demand in the region “slowly recovers from a period of weakness”.
The growth in global air travel demand is already starting to slow with the performance of the global economy key to this trend, and it’s likely that growth will moderate further this year, predicts BCD Travel. It expects demand will still be strong enough to allow airlines “to increase average fares in most markets to help offset higher fuel and labour costs”. But, as capacity continues to expand, it expects this to “limit fare increases—with some exceptions”.
Globally, it predicts average ticket prices (ATPs) to rise by +1% in 2020. This applies to intercontinental travel in both business and economy class and to regional flights in economy. Regional business class fares will increase by +2%. But, the airfare outlook differs by region and these aggregated figures mask regional variations in the BCD Travel forecast.
For example, it predicts intercontinental business class fares will increase by +1% in most regions, but they will be flat in Latin America and will fall by -1% in Southwest Pacific. Regional business fares will go up in all markets, with ATP increases ranging between +1% and +3% with travellers flying within Asia and Latin America facing the highest fare rise at +3%.
Most intercontinental economy fares will stay flat or rise by +1%, according to BCD Travel, but it predicts them to decrease in Southwest Pacific due to extra competition on transpacific routes. Most economy fares for regional travel will rise, with increases ranging from +1% to +3% with Latin America again seeing the biggest jump, as demand within the region recovers. “In Europe, the strength of low-cost carriers will ensure regional economy fares remain flat,” it says.
The full 80-page ‘2020 Industry Forecast‘ provides in-depth regional insights within both the air and hotel sectors, but also looking at ground transportation services like ride-hailing and high-speed rail.