Minnesota – The cost of international business travel and events is expected to grow through the end of 2023 and into 2024, but at a far slower rate than the very rapid increases experienced in 2022. This is supported by the 2024 Global Business Travel Forecast, which was released today by the Global Business Travel Association (GBTA), the biggest business travel trade association in the world, and CWT, a business travel and meetings expert.
In 2022, travel expenses soared, significantly beyond some of the increases predicted in the prediction from the previous year due to rising fuel prices, labor shortages, and supply chain issues as well as a ferocious demand. The report, which uses anonymized data generated by CWT and GBTA, with publicly available industry information, and econometric and statistical modeling developed by the Avrio Institute, predicts that price increases will be more subdued over the next 12 to 18 months due to lingering economic uncertainty and a gradual easing of supply-side constraints
Global year-over-year business travel & events price changes ($USD):
|Air – Average Ticket Price||+72.2% |
|Hotel – Average Daily Rate||+29.8%|
|Car – Daily Rental Rate||+9.8%|
|Meetings & Events –|
In 2022, the average ticket price (ATP) for flights taken for business travel throughout the world increased significantly and reached new highs. In 2022, the ATP increased by 72.2% YoY to $749, a significant increase above 2019 levels ($670). Despite a robust recovery in demand, with passenger numbers swiftly returning to pre-pandemic levels mostly due to unmet leisure travel demand, labor shortages and supply chain concerns continue to limit airline capacity. Future ATP growth is predicted to be more moderate, but still strong, at 2.3% in 2023 and 1.8% in 2024. However, since their travel numbers continue to be below those before to the epidemic, many business purchasers now have less negotiating power with airlines.
In comparison to other regions of the globe, the Europe, Middle East, and Africa (EMEA) area had the highest ATP in 2022, at $855. This is an increase of 31.5% from 2021. Moving ahead, more moderate price increases are anticipated; ATPs are anticipated to grow 2.9% this year and 2.2% in 2024.
However, despite a dearth of demand for international travel from China, the ATP in Asia Pacific increased by the most of any area in 2022, rising 148.7% year over year to $567. Important business travel destinations, including Australia and Japan, have begun granting visa exemptions and opening their doors to vaccinated passengers. With a substantial increase in the percentage of long-haul tickets, average airfares increased by 75.3% for Australia and 79.3% for Japan in 2022. With ATPs expected to expand by 4.8% in 2023 and 2.7% in 2024, the increasing supply could help reduce pricing pressures in the area as airlines in the region, notably the big carriers from China, continue to add more international route capacity.
The worldwide average day rate (ADR) for hotel reservations surpassed prior forecasts, increasing by 29.8% YoY to $161 in 2022. Although occupancy rates have been high, labor, electricity, and food and beverage expenditures have also been high. In fact, in 2022, a number of global cities, including London, Miami, and Singapore, posted their highest ADRs ever. Hotel building is still below its pre-pandemic high, which limits the supply. Existing hotels may maintain their pricing power for longer even while ADR increases are slowing since there are fewer establishments to contend with. ADRs are anticipated to rise by a further 4.3% in 2023 to $168 and then 3.6% in 2024 to $174.
In 2022, hotel ADRs in North America increased by the most of any area, up 33.8% YoY to $174. Due to economic uncertainty, occupancy in the area is anticipated to increase more slowly in the second half of 2023 and 2024. ADRs are anticipated to increase by 3.3% in 2024 and 4% in 2023, respectively.
ADRs in Latin America also increased significantly by 26.9% YoY in 2022, as double-digit inflation was witnessed in a number of the region’s nations. ADRs are predicted to expand by 9.1% in 2023 and 5.6% in 2024 at this time, when inflation seems to have peaked.
Transportation on land
Companies sold automobiles during the pandemic as demand fell, reducing the availability of car rentals. Due to supply chain problems, which were mostly brought on by a global scarcity of automotive semiconductors that caused vehicle costs to rise when business resumed, cars were not replaced as quickly as they should have been. These elements have caused prices to climb by 9.8% YoY in 2022, with a further 6.7% increase predicted for this year. In 2024, pricing growth is anticipated to slow to 2.1%.
Events and Meetings
Meetings and activities held in person have recovered more forcefully than many had anticipated. Key commercial objectives like client acquisition and relationship development are challenging to accomplish electronically. Additionally, there has been an incredibly high demand for incentive trips as businesses look for ways to encourage and reward personnel. In fact, CWT Meetings & Events has seen that these excursions are becoming longer and more frequent, and it anticipates that this trend will continue.
In 2022, each participant paid an average of $160 per day. In 2023 and 2024, respectively, this is predicted to rise to $169 and $174.
Events still have limited lead periods in this post-pandemic society. But if they want to keep costs down, organizers need immediately look forward to 2024 with a 12-month planning cycle. Consolidating transitory travel and M&E spending might also provide purchasers greater bargaining power when negotiating prices.