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Corporate travel prices expected to rise next year

Tuesday 14, September 2010

 

Corporate travel prices expected to rise next year

 

Corporate travel continued to rebound at a rapid pace through August 2010, with a double-digit increase year over year in overall demand, according to a third-quarter update to the 2010 Industry Forecast published by BCD Travel consulting unit Advito.

 

Underlying the aggregate, however, demand levels continue to vary significantly from region to region.

 

For 2011, Advito is forecasting moderate airfare increases across all regions, but year over year increases will not be as great as in 2010. Forecasted increases are from 2 to 7 percent in North America; 4 to 5 percent in Latin America and Asia-Pacific; 2 to 7 percent in Europe; 3 to 6 percent in the Middle East; and 2 to 5 percent in Africa.

 

Throughout the year, Advito’s quarterly forecast updates reassess the economic parameters on which its initial forecast was based, analyse year-over-year booking data from the previous quarter and issue revisions as appropriate. The Q3 update references industry and economic data through early August and transactional data for hotel and air through June.

 

Data analysed by Advito show stronger global economic expansion than anticipated in the first half of 2010, led by Germany and Asia. The growth in those markets should slow in the second half of 2010.

 

A spike in corporate travel demand in the first half of 2010 means annual airfare increases originally projected in the 2010 Industry Forecast will rise further in North America, Asia-Pacific, the Middle East and Europe.

 

Air

Advito’s review of industry, economic and passenger data through the second quarter shows airfares are rising sharper and faster than originally predicted—and more than earlier updates revised—in North America, the Middle East, Asia-Pacific and, in a turnaround from the first quarter, Europe.

 

Advito saw an almost 20 percent year-over-year increase in the number of business trips in this region during the second quarter of 2010. With the strong spike in demand, average ticket price rose significantly in all classes except in domestic business class, driven particularly by transatlantic and transpacific traffic.

 

Europe, led by Germany’s astonishing economic performance in the first half of the year, saw significant jumps in demand (IATA reports the region showed 6.2 percent increase in demand year-over-year in July) and in average ticket price in all categories during the second quarter. The most surprising category was regional business class, which showed a significant upward tick in the second quarter.

 

Asia Pacific continues to perform strongly, but Advito sees demand growth flattening in the region, with pricing data in all categories showing softening between the first and second quarters. The drop-off in average ticket price (while still up significantly over 2009) was stronger in regional travel categories than in intercontinental fares.

 

Hotel

Despite a surge in second-quarter demand in many markets, Advito is maintaining its 2010 average daily rate (ADR) forecasts in all markets except China, Singapore and the U.K., where forecasts have been revised upward. Buyers should be aware, however, that considerable variation exists between markets within a region and between cities within a given market. Consequently, major markets and cities will experience rate increases greatly in excess of the regional or national average.

 

A number of key markets experienced significant ADR rebounds in the second quarter of 2010, including: Argentina, Belgium, Brazil, China, France, Mexico, the Netherlands, the Russian Federation, Singapore and the U.S.

 

Hotels are anticipating across-the-board increases in negotiated and public rates. Advito believes that hotels will need to see occupancy increases before rates can rise significantly. However, we predict that ADR will manifest moderate increases across all regions in 2011.

 

(Source: TravelDailyNews.com)

 

 

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