Business travel rate increases are likely to be conservative in Europe and North America, where auto rental rates are expected to remain stagnant, according to data from American Express Business Travel Global Forecast for 2012 . Asia and Latin America, though, are likely to see relatively higher increases as travel demand within and to these regions remains strong.
“As business travel is both an essential part of global economic performance as well as an enabler of business growth, we expect the combination of demand and effective travel-supplier yield management to likely push rates up that business travelers pay across the board in 2012,” said Christa Degnan Manning, director of Expert Insights research, American Express Global Business Travel.
North America Car Rental Projections
Car rental rates in North America are expected to remain flat as a result of a highly competitive marketplace and excess capacity.
• North America Base Rates: (-1) – 0 percent
• North America Rate Per Day: 2 – 3 percent
“2012 is the year to aggressively target car rental contract negotiations as it promises the best opportunity for year-over-year savings in travel category management,” Manning said. “Similar to air and hotel, car rental companies are seeking to recoup average daily rate declines of the past few years with additional fees and services, so companies should particularly pay attention to mitigating those costs in ground transport by clarifying policies and educating their traveler populations on which expenses will be reimbursed.”
North America Airfare Projections
Business class airfares are expected to see the greatest increase in 2012 as airlines take advantage of business travelers needing to be on the road to secure new accounts and market expansion where opportunities exist. These increases will likely be true even if consumers opt to stay home in the face of a potential double-dip recession in Western markets as travel suppliers target business people with the classes of service and productivity-based amenities preferred by the frequent traveler community.
• North America Short Haul (Economy): 2 – 5 percent
• North America Long Haul (Economy): 0.5 – 3.5 percent
• North America Short Haul (Business): 5 – 7 percent
• North America Long Haul (Business): 3 – 5 percent
North America Hotel Projections
Across the two primary business travel hotel categories of mid-range and upper-range properties, the Global Forecast predicts likely low single-digit increases in North America. Of note, metropolitan areas play a significant role in expected price increases which vary by individual city market.
• North America Mid-Range: 2.5 – 6.5 percent
• North America Upper-Range: 1.5 – 5.5 percent
Europe, Middle East and Africa (EMEA) Airfare and Hotel Projections
For airfare, travel volumes and capacity will likely vary throughout the region and result in a range of pricing changes, particularly by type of flight from 0-4 percent for economy short-haul trips to 3-7 percent increases for business long-haul trips.
For corporate hotel rates in EMEA, the region is likely to see conservative increases; however, there will likely be declines in markets like Spain and Greece that are enduring particularly challenging economic conditions. Hotel rates could increase in this region by up to 5 percent.
Latin American (LATAM) Airfare and Hotel Projections
The combination of several strong economies in Latin America and consolidation among regional carriers is expected to push airfare higher overall for the LATAM region. However, country-to-country factors such as inflation and foreign exchange rates greatly impact expected pricing between destinations. Whether economy or business, or a short- or long-haul flight, prices are expected to increase by at least 3 percent.
The LATAM hotel market is similarly bolstered by strong economies and is projected to have moderate increases at both mid-range and upper-range properties at 1-5 percent and 2-6 percent, respectively.
Asia-Pacific (APAC) Airfare and Hotel Projections
The APAC region continues to be a relative bright spot in an otherwise uncertain economic picture globally, and is expected to lead in business travel demand. As such, airfare is expected to increase — in ranges of 1-10 percent depending on flight type — on top of considerable jumps in prices paid in 2011.
As with airfare, the increased volume of travelers in the Asia Pacific region, coupled with constrained capacity, is resulting in increased hotel rates expected to be in the 6-10 percent range.
About the Global Forecast and Methodology
The 2012 Global Forecast is based on a number of primary data sources, including proprietary data from the American Express Business Travel Monitor, the American Express contracted rates database, aggregate transaction reports, and secondary data sources including Smith Travel Research (STR) Global Hotel Reviews and Global Business Travel Association (GBTA) research on travel expenditures.
The annual forecast, which has been produced for more than two decades, includes more than 2,200 individual predictions, including 136 air pricing predictions globally by type of flight and class of service; 932 country, regional, and city hotel rate predictions by mid-tier, upper tier, and overall property averages; and 35 country and regional ground transportation predictions on base rates and average daily rates expected to be paid worldwide next year.
Projections were based on a combination of these primary and secondary sources and interviews with American Express category and regional experts. All ranges represent forecasted year-over-year increases in negotiated business travel rates.
Learn more at www.americanexpress.com/businesstravel.