by Allen J. Sheinman | July 24, 2018
Travelers can expect steep increases in prices in 2019, with hotel room rates rising by 3.7 percent and the cost of air tickets climbing by 2.6 percent, according to the fifth annual Global Travel Forecast, published today by the Global Business Travel Association and Carlson Wagonlit Travel with the support of the Carlson Family Foundation. The report noted that the increases are due to a growing global economy and rising oil prices.

"Prices are expected to spike in many global markets even as inflation remains subdued," noted Kurt Ekert, president and CEO of CWT. "The report explores the causes and includes an overview of what we expect to see in key markets worldwide. It also gives specific recommendations, giving travel managers ammunition for their upcoming negotiations."

The 2019 forecast also shows the trends and developments that will shape the business travel industry. "The future of corporate travel can be summed up as accelerated personalization - with mobile technology, AI, machine learning and predictive analytics all playing their part," said Ekert.

The projections in the 2019 Global Travel Price Forecast are based on:
A statistical model, developed by GBTA with market and economic research firm, Rockport Analyticsthat evaluates historical price behavior and forecasts future price references. The market-specific expertise and travel industry knowledge of CWT and CWT Solutions Group personnel worldwide. Information sourced from Moody's Analytics, the International Monetary Fund Research Department, the United Nations and other leading organizations.

Following are key findings by market segment:

Air Travel
According to the forecast, the aviation sector will be shaped by the introduction of ultra-long-haul flights and increasing competition from low-cost carriers, which are not only multiplying but also fighting for long-haul routes - and by the airlines' push to adopt New Distribution Capability - a data-transmission standard promoted by the International Air Transport Association to improve communication between airlines and travel agents.

Airfares will likely become more expensive due to rising oil prices, the competitive pressure from the shortage of pilots, potential trade wars and increasing fare segmentation to improve yield. Among the forecast findings:

• Asia Pacific expects to see a 3.2 percent rise in 2019 pricing. Chinese demand will remain high, and by 2020 the country is expected to become the world's biggest air travel market. In 2019, the country's flights are seen going up by 3.9 percent, but China will not be alone. The vast majority of countries in the region will see price increases, especially in markets like New Zealand (7.5 percent) and India (7.3 percent). The latter is expected to be the world's largest aviation market by 2025, with airports operating beyond capacity. The only exception in this booming region is Japan. Prices there will likely drop by 3.9 percent due to the country's added capacity in preparation for the Olympic Games in 2020.

• Across Europe, the Middle East and Africa, air travel is anticipated to continue growing in Western Europe, with prices rising by 4.8 percent. The increase will be especially steep in Norway (11.5 percent), followed by Germany (7.3 percent), France (6.9 percent) and Spain (6.7 percent). Eastern Europe and the Middle East and African countries, on the other hand, will experience a decline of 2.3 percent and 2 percent, respectively.

• Prices across Latin America are expected to drop by 2 percent in 2019. However, México and Colombia will see slight increases at 0.1 percent and 1.2 percent, respectively, while Chile will experience a rise of 7.5 percent

• North America will see prices rise by a modest 1.8 percent. In the United States, airlines are recalibrating to reflect better areas of demand, depending on how trade relationships change with key U.S. allies and adversaries. The U.S. aviation market is expected to see capacity compression due to expanded fare fragmentation, with premium economy and basic economy reducing available seats, as carriers target margin improvement.

Hotels
The hotel outlook for 2019 is driven by the overall increase in air travel, which will fuel demand for rooms. Technology will also play an important part. Hotels are introducing new developments to personalize the guest experience. The increase of mobile penetration, on the other hand, is forcing travel managers to offer their travelers apps that also serve to accommodate greater in-policy booking autonomy.

Further mergers - and upscale hotels competing with midscale ones due in part to a growing appetite for boutique accommodation among younger travelers - will also be on the agenda. 

• In Asia Pacific, hotel prices are likely to rise by 5.1 percent, with a large discrepancy as Japanese prices are expected to fall by 3.2 percent. But New Zealand is set to rise by 11.8 percent. In Australia, 2019 and 2020 are expected to bring the largest number of new rooms coming online, with an increase of 3.4 percent of total supply each year. Smart hotels are on the rise in Singapore, while in Thailand, optimism is running especially high after a period of political tumult.

• Mirroring air prices, hotel rates across Europe, the Middle East and Africa are expected to rise; in Western Europe by 5.6 percent, while declining by 1.9 percent in Eastern Europe and 1.5 percent in the Middle East and Africa. Norway will again lead with a rise of 11.8 percent, followed by Spain (expected to replace the U.S. as the world's second most popular destination) at 8.5 percent, Finland at 7.1 percent and France and Germany each at 6.8 percent.

• Within Latin America, hotel prices are expected to fall by 1.3 percent, with declines in Argentina (down by 3.5 percent), Venezuela (down by 3.4 percent), Brazil (down by 1.9 percent) and Colombia (down by 0.7 percent). However, Chile, Peru and Mexico are expected to see increases of 6.4 percent, 2.1 percent and 0.6 percent, respectively.

• In North America, hotel prices will go up by 2.1percent, with 5 percent increases in Canada and 2.7 percent in the U.S.

Ground Transportation 
Next year, ground transportation pricing is expected to rise by just 0.6 percent globally. However, by the fourth quarter of 2019, we will see a concerted effort by rental companies to raise prices. 

Expect to see a growing preference among travelers for ride-hailing apps, while interest in high-speed trains is fading due to high network costs and low-tech distribution systems.

Mobile mobility will rise. On-demand, shared, electric and connected cars (equipped with Internet access) all will become more popular. Connected-car technology has the potential to change the entire automotive industry.

• In Asia Pacific, markets like New Zealand (4 percent), India (2.7 percent) and Australia (2.4 percent) will see increases. In China, giant Didi Chuxing is making big bets on autonomous driving. This year, Uber has sold its Southeast Asian business to Singapore-based Grab, and Indonesian Go-Jek is expanding to Vietnam, Thailand, Philippines and Singapore.

• In Europe, the Middle East and Africa, countries like Finland, France, Germany, Italy and Spain will see increases of over 4 percent, while Denmark and U.K. rates will grow by 3 percent and 2 percent, respectively. Norway will be in pole position with a 10 percent increase. On the downside, prices will drop dramatically in Sweden (down by 13.9 percent) and very slightly in Belgium (down by 0.9 percent).

• Prices in Latin America will show strong decreases in Argentina (down by 9.7 percent) and Brazil (down by 5.4 percent) and a more moderated one in Mexico (0.3 percent). Chilean prices will be up by 3.1 percent.

• In North America, Canada is expected to see a 3.6 percent increase in 2019, and the U.S. a 1.0 percent increase. In the States, the Audi-owned, app-based car rental service, Silvercar, continues its aggressive expansion. The company offers mobile-first car rental without the lines and paperwork.

For more detailed information, download the 2019 Global Travel Forecast.

About the 2019 Forecast
The projections in the 2019 Global Travel Price Forecast are based on:
A statistical model, developed by GBTA with market and economic research firm, Rockport Analytics, that evaluates historical price behavior and forecasts future price references.
The market-specific expertise and travel industry knowledge of CWT and CWT Solutions Group personnel worldwide.
Information sourced from Moody's Analytics, the International Monetary Fund Research Department, the United Nations and other leading organizations.