Throughout 2022, air fares are expected to rise by 48.5%, hotel rates by 18.5%, and car rental charges by 7.3%. But it doesn’t end there. The Global Business Travel Association and CWT further predicts that travellers are set to encounter an additional 8.4%, 8.2% and 6.8% increase for flights, hotels and car rentals respectively in 2023.
According to the 2023 Annual Global Business Travel Forecast, the year-on-year changes in travel pricing are as follows:
| 2020 [actual] | 2021 [actual] | 2022 [forecast] | 2023 [forecast] | |
| Air fares | 12% | 26% | 48.5% | 8.45% |
| Ground transportation | 4.9% | 5.1% | 7.3% | 6.8% |
| Hotel rates | 13.3% | 9.5% | 18.5% | 8.2% |
“Labour shortages across the travel and hospitality industry, rising raw material prices, and greater awareness for responsible travel are all having an impact on services, but predicted pricing is, on the whole, on par with 2019,” said CWT CEO Patrick Andersen.
Rising fuel prices, labour shortages, and inflationary pressures in raw material costs are the primary drivers of the price surge, according to the 2023 Global Business Travel Forecast.
For air travel, the increasing demand for travel now that borders have reopened, alongside the rising costs of jet fuel which has more than doubled in some markets to over US$160 per barrel, according to S&P Global, is causing a spill over to passenger ticket prices.
Hotel rates have accelerated across the world, including a 22% rise in North America, and a forecast of 31.8% across Europe, the Middle East & Africa, mostly due to high demand for rooms despite the continued capacity constraints.
Accommodation costs had started increasing in 2021 driven by the beginning of the travel rebound. With business travel, whether in groups or individuals, improving by the day, there’s further pressure on average daily hotel rates.
Car rental agencies have yet to recover from reducing its fleet sizes from the pandemic, resulting in a shortage of vehicles in the face of high demand. Corporate travel managers are increasingly looking at electric vehicles to combat both the rising prices of fuel and carbon emissions.
When it comes to meetings and events, the pent-up demand has resulted in an increase of cost-per-attendee. Participants attending events in 2022 are expected to fork out around 25% more in costs than in 2019, and it's forecast to rise a further 7% in 2023.
“Demand for business travel and meetings is back with a vengeance, of that there is absolutely no doubt,” said CWT CEO Patrick Andersen.
Beside the pent-up demand for meetings and events, the event sector is also going head to head with other types of events that were cancelled during the pandemic. Shorter lead times for events are also contributing to the rise in costs.
Corporates can expect travel prices to continue rising for the rest of 2022 and throughout 2023, according to the annual price forecast from travel management company CWT and the Global Business Travel Association [GBTA].
Factors such as rising fuel prices, staff shortages and inflation are likely to be the “primary drivers” for higher prices over the next 18 months, says the 2023 Global Business Travel Forecast.
CWT is predicting that air fares will rise by an estimated 48.5 per cent in 2022, followed by an 8.5 per cent increase next year. Hotel rates are set for an 18.5 per cent jump this year and then a further rise of 8.2 per cent in 2023.
Car rental prices are likely to see a smaller percentage increase in both 2022 [7.3 per cent] and 2023 [6.8 per cent], but hire rates had already started rising again in 2021 [up by 5.1 per cent], unlike air and hotels, which were still seeing significant price falls last year.
Patrick Andersen, CWT’s CEO, said demand for business travel was “back with a vengeance” around the world and pointed out that these forecast prices were mainly “on a par” with 2019.
CWT said there were several “cautionary notes” which could impact its predictions, including higher inflation, the impact of the Ukraine war and the risk of further Covid-19 outbreaks leading to travel restrictions.
Richard Johnson, senior director at CWT Solutions Group, told BTN Europe that the forecast had been prepared with “significant due diligence”, including working with economists.
“We’re confident it’s as robust as it can be, given the level of uncertainty we face,” he added.
Johnson said the increase in airfares was also likely to include more corporate bookings in airlines’ premium cabins, which dropped as a percentage during the pandemic. The share of premium bookings fell to 4.5 per cent in 2021 but climbed back to 6.2 per cent in the first half of 2022.
He added that the percentage of premium air bookings could return to the 2019 figure of 7 per cent or even surpass this level over the period covered by the report.
Johnson said that both airfares and hotel rates have been pushed up due to “strong” leisure travel demand “competing for available capacity”. This was also driving more blending of leisure and business trips, which hotels would need to adapt their facilities to cater for.
“The cost of labour, food and beverage, and energy are all going to drive hotel rates up,” predicted Johnson. “In the Americas and parts of Europe, rates are already higher [than before the pandemic].”
CWT said that Europe was likely to see “an uneven recovery” in hotel rates, with prices in the UK already above 2019 levels but other major destinations, including Germany and France, “unlikely” to surpass pre-Covid rates due to the economic impact of Russia’s
invasion of Ukraine.
Johnson added that corporates who wanted their travellers to use electric vehicles during their trips may also start to choose hotels for their programmes based on having on-site charging facilities.
Car rental companies continue to suffer capacity constraints due to the lack of new vehicles being supplied as part of the worldwide shortage of microchips.
Johnson said this meant hire firms were keeping cars in their fleets for longer than normal, but this should “not create a worse experience” for travellers, provided that service standards are maintained.
The report also looked at the costs of meetings and events. It predicts that the cost-per-attendee will rise by 25 per
cent this year compared with 2019, and then go up by another 7 per cent in 2023.
Johnson highlighted the huge swing back to in-person meetings and events in 2022, which rose by 65 per cent compared with last year. Meanwhile, virtual and hybrid events have dropped by 70 per cent year-on-year.
Part of this demand for physical meetings is being fuelled by the higher number of remote workers post-Covid and the need for organisations to bring them together regularly by booking meetings space.