Monday,  October 2, 2023  7:44 am

Report: business travel on the grow in 2018

Report: business travel on the grow in 2018

The outlook for international business travel this year is generally optimistic, according to the Global Business Travel Forecast 2018 published by American Express Global Business Travel (GBT).

Demand for business travel started to rebound last year, driven by a steadily improving global economy and growing confidence among the business and investor communities, the report states, expected to grow over the next 12 months with some notable gains anticipated in Europe and Asia. However, prices will see only marginal gains, as suppliers rapidly increase capacity to meet demand as they compete for market share.

Despite the recent economic progress made in many global marketplaces, an element of caution remains in some quarters. Geopolitical instability combined with moves by some governments towards more protectionist economic policies has generated an undercurrent of uncertainty in the business community.

In North America, U.S. foreign policy will loom large in 2018, as foreign trade agreements are renegotiated, potentially impacting international demand for travel. Already facing weakening demand and overcapacity on some international routes, U.S. carriers are re-prioritizing domestic operations, with additional connections to secondary, smaller destinations. The direct competition with LCCs will help keep fare increases modest next year. In Latin America, airfares should see slight increases thanks to regulatory changes and increasing demand along international routes.

Canada will see the strongest rate growth in North America, where a rebounding economy and weak dollar should stoke demand from US visitors, particularly in Canada’s largest cities. In a reversal of conditions in the US, hotel demand continues to outpace supply in many Canadian cities, resulting in healthy occupancy and rate growth. Additionally, rental car rates in North America will increase for the first time in years, driven by supplier efforts to meet traveller needs through vehicle enhancements and innovations. Canada is expected to see moderate increases in ground travel rates due to a number of factors, namely positive economic conditions, better fleet management and higher fleet costs for rental car companies.

Additional global highlights include:

Air: While strong demand is expected to drive airfare increases across all regions, overcapacity on certain routes, aggressive expansion by low-cost carriers (LCCs), and low oil prices will keep them in check. Full-service carriers are increasingly unbundling fares and adding premium economy seating options to entice consumers to better compete with LCCs.

Hotel: Hotel performance is expected to improve globally, with small to moderate rate increases driven by strengthening regional economies, despite robust investment in new hotel supply. Total costs, however, should increase even further as additional ancillary fees and stricter cancellation policies are applied by many hotels looking to bolster profitability.

Ground: After years of flat or negative growth, rental car rates should finally see increases as companies improve their fleet management while operating costs put pressure on pricing. However, competition will remain fierce. In the absence of significant rate increases, car rental companies are once again turning to ancillary services and fees to drive greater profitability.

Click here to view the full Forecast.