With summer now fading into our collective memory, the industry is turning its sights on the last quarter of the year. For many hoteliers, the summer has been a great time to solidify sales and bask in the glow of increased travel trends. Now, they wait with bated breath to see how the fall will play out and whether business travel will begin to rebound. But with news that travel prices are expected to continue their upward trajectory, the reality may play out differently than many had hoped.
According to the 2023 Global Business Travel Forecast, published last month by CWT (the B2B4E travel-management platform) and the Global Business Travel Association (GBTA), rising fuel prices, labour shortages and inflationary pressures in raw-material costs are the primary drivers of expected price growth.
Interestingly, the past two years seem to have moved sustainability on the front burner as consumers and businesses have become increasingly concerned about combating climate change. That means there will be a renewed focus on promoting greater visibility at the point of sale for greener travel options, as well as carbon footprinting, helping the travel industry to actively assist in responsible choice-making.
It doesn’t appear prices will decrease any time soon. Pent-up demand, a desire to build company culture and an uncertain economic outlook mean the cost-per-attendee for meetings and events in 2022 is expected to be approximately 25 per cent higher than in 2019, and it’s forecast to rise a further seven per cent in 2023.
According to the study, prices are expected to rise 48.5 per cent in 2022, but even with this steep price increase, prices are expected to remain below pre-pandemic levels until 2023. Following an increase of 48.5 per cent in 2022, prices are expected to rise 8.4 per cent in 2023. Rising demand and continued price rises on jet fuel, are putting upward pressure on ticket prices.
On the hotel front, prices fell 13.3 per cent in 2020 from 2019 and a further 9.5 per cent in 2021, however the report expects them to rise 18.5 per cent in 2022 followed by an 8.2 per cent lift in 2023. Hotel prices have already eclipsed 2019 levels in some areas such and are expected to do so globally by 2023.
In most parts of the world, hotel rates have risen sharply, including a 22 per cent increase in North America and a forecast 31.8 per cent across Europe, the Middle East & Africa. This has been fuelled by an accelerated recovery coupled with continued capacity constraints.
Hotel rate increases were initially driven by strong leisure travel in 2021 but group travel for corporate meetings and events is improving and transient business travel is gaining healthy pace, putting further pressure on ADR. To access the full report of the study, click here.