2016 Business Travel Price Forecast: Airfare Stable; Hotel Rates Rise

By Susan Avery

January 26, 2016 at 12:57 PM

In 2016, travel procurement professionals are seeing airfares hold steady despite low oil prices, hotel room rates climb due to increased demand, and more competition for their business from auto rental and other transportation services companies.  

For travel buyers in North America, business airfares will remain unchanged, with economy rates rising in regions where there’s more demand, according to the Advito 2016 Industry Forecast for Business Travel. 

“More than ever, air market conditions vary by route,” says Bob Brindley, Principle at Advito. “So, it’s especially important for companies to understand precisely where they’re spending the most and whether cheaper alternatives exist.” 

The American Express Global Business Travel Forecast 2016 shows increased competition and growth among budget air carriers helping to suppress price increases for short-haul flights in North America, while fares on long-haul flights are expected to remain relatively flat, particularly on routes to Asia and Latin America.

am ex global business travel forecast 2016.jpg

 

 

 

 

 

 

 

 

 

 

 

 

 

Wanted: Hotel Rooms on West Coast

Meanwhile, Advito expects hotel room rates in North America to rise 4% to 6%, as demand continues to grow and lack of supply puts pressure on prices. Buyers are more likely to see hikes in the U.S. than in Canada or Mexico. The forecast cautions buyers on hotels enforcing ancillary fees on such services as Internet access and early check-in. 

Demand for hotel rooms in the U.S. is nearing levels not seen since 1995, say the Global Business Travel Association and Carlson Wagonlit Travel in their 2016 Global Travel Price Outlook. Cities where rooms are rising the most include San Francisco, San Jose and Los Angeles. In Canada, Toronto, Vancouver and Montreal, rates will increase moderately. 

Meanwhile supply doesn’t seem to be keeping up in some markets. “While a healthy pipeline of new construction is on the horizon, the impact from added inventory is not likely to appear until after 2016,” finds the America Express Business Travel Forecast 2016. “In secondary markets, excess inventory will dampen price increases while competition for customers is pushing hotel brands to focus on property renovations.”

As for ground transportation, the American Express Business Travel Forecast 2016 reports that rates will remain relatively flat due to overcapacity, strong competition and continued focus on ancillary fees.  

While consolidation in the car rental industry has led to oversupply and lower rates, the GBTA CWT 2016 Global Travel Price Outlook advises travel buyers not to overlook the possibility of higher prices in the coming year. However, the report also suggests that the category which although makes up 4% to 6% of a company’s annual travel budget (these figures are higher for those that use rail travel) is relatively unmanaged, ground transportation presents the biggest opportunity for travel buyers to consolidate the spend and reduce costs.  

Please click on image to enlarge for viewing. 

 



Tags: MRO indirect Prices Procurement sourcing travel forecast
Category: News Article

Susan Avery

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Susan Avery is Editor-in-Chief at My Purchasing Center. She writes articles, blogs and white papers and manages and creates other content for the online procurement and supply management publication. She produces and moderates roundtable discussions, podcasts, webcasts and video interviews. Susan has 30 years experience covering procurement and supply management for Purchasing magazine and Purchasing.com. 


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