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Business travel predicted to become more expensive
November 18th 2021
Expect price increases for hotel accommodation, air and ground travel over the next two years as demand and costs rise from constrained capacity and new sustainability requirements from travellers. Read More » That is the takeout from the latest Global Business Travel Forecast, published this week by CWT and the Global Business Travel Association (GBTA). From an airline perspective, the forecast noted airfares rose 2.6% in 2019 only to fall 3.1% in 2020 with business travellers experiencing a further 31% decline. The deterioration accelerated this year with a 38% decline in premium class tickets and a fall of almost 19% in economy fares. However, air fares are forecast to rise 3.3% in 2022 and 3.4% in 2023. “Airline capacity remains tight and is unlikely to return to pre-pandemic levels until 2023, or 2024,’’ the forecast said. “As a result, business travelers are competing for limited capacity with leisure travelers. This will continue to exert pressure on airfare prices in 2022 as they move in unison with demand. If demand increases faster than capacity returns, price increases could outpace these forecast increases.” The forecast predicts premium fares will start picking up in 2023 as demand normalizes. Economy fares, especially on domestic routes, will continue to benefit from strong gains in leisure traffic going into 2022.“Domestic leisure destinations will continue to lead the recovery in 2022. Urban centres with strong corporate traffic will take longer to recover, but higher vaccination levels should strengthen business traveller confidence,’’ the forecast said. “Higher oil prices will increase operating costs and continue to put upward pressure on fares as airlines seek to improve profitability metrics. In 2022, corporate travel policies will be a factor in the recovery of airfares on corporate-heavy rates.”
