Strength in global economy means higher travel pricing in 2018

July 21, 2017

SYDNEY -  According to the fourth annual 2018 Global Travel Forecast released by Carlson Wagonlit Travel and the GBTA Foundation, the education and research arm of the Global Business Travel Association,, travel prices are expected to rise sharply in the coming year, reaching nearly 4% increase in some sectors.

The report shows global airfares are expected to rise 3.5% in 2018 and hotel prices by 3.7%, but ground transportation such as taxis, trains and buses, is expected to rise only 0.6% - significantly less than the 3.0% inflation forecast for 2018.

“The higher pricing is a reflection of the stronger economy and growing demand,” said Kurt Ekert, President and CEO of Carlson Wagonlit Travel. “The global numbers from this forecast should be considered strong leading indicators of what 2018 will mean for global businesses, as we anticipate higher spending.”

“Geopolitical risks, uncertainties in emerging markets and ever-changing political environments in Europe and the United States mean today’s travel professionals have more than ever to take into account when building their travel programmes,” said Jeanne Liu, GBTA Foundation Vice President of Research.

“The most successful programmes will have to keep a watchful eye on both geopolitical risks and a rapidly-changing supplier landscape as they reevaluate strategy often and adapt as necessary.”

The uptick in global airfares comes as crude oil prices rise, in spite of airlines adding an expected 6.0% capacity in 2018. Complicating airline pricing is increased segmentation of basic fares among large carriers.

Asia Pacific expects to see a 2.8% rise in 2018 pricing with domestic demand increasing, particularly in China and India. However, as many of the economies in Asia strengthen, weaknesses in infrastructure – and airports in particular – are increasingly becoming apparent.

Of hotel costs, the report says suppliers are progressively moving corporate buyers away from fixed, negotiated hotel rates and toward dynamic rate pricing.

“There is also a global trend towards “smarter” hotels, with hotels investing in beacon technologies, messaging, in-room entertainment and more.

“Increasingly tech-savvy guests will use apps to check in and out, unlock their hotel room door, operate the television remotely and control room temperature.”

Across Asia Pacific, hotel prices are likely to rise 3.5% - with a large discrepancy as Japanese prices are expected to fall 4.1%, but New Zealand is set to rise a full 9.8%.

“Strong economies means demand is increasing in the APAC region. Buyers should anticipate a more challenging discussion with newly merged hotel groups, especially in high-volume markets such as Bangkok, Beijing, Shanghai and Singapore.” (ATI).