Business Travelers Should Expect More Expensive Flights and Hotels

A forecast of next year’s travel trends from American Express Global Business Travel suggests that global airfares and hotel rates will rise in 2016, inflating costs for business travelers.

The American Express Global Business Travel Forecast 2016, which compiles 1,800 different pricing predictions from across the travel industry, also finds that ground transportation costs will stay flat globally.

“While we expect modest increases in global travel prices heading into 2016, travel managers are operating in an era of new challenges and evolving disrupters,” said Caroline Strachan, vice president of consulting for American Express Global Business Travel. “In addition to handling tasks such as measurement and compliance, new factors such as the sharing economy and mobile booking channels are becoming increasingly popular for business travelers. In order to thrive in this digital era, travel managers need to be aware of and dynamically adapt to these forces across a variety of geographies.”

The good news for travelers is that the abundance of low cost carrier options for short-haul economy flights could lead to a reduction in airfares for travelers; the predictions expect short-haul economy fares to change from -1.5 percent to 1.1 percent.

“The increased proliferation of low cost carriers could impact business travel in 2016, although the degree of this impact may vary for the U.S. and Europe,” said Jim Ranney, director of consulting for American Express Global Business Travel. “In North America, U.S. air carriers are looking to modify their product offerings to enhance their ability to compete with other carriers. Low cost carriers are helping to lower price increases and push larger carriers to unbundle and create base economy fares that feature significant restrictions (i.e. no free baggage), allowing them to align with low cost carrier fares. Low cost carriers are also increasing capacity more so than major U.S. legacy carriers and shifting their focus to the corporate segment.”

Long-haul economy seats, however, are slated to potentially increase more than business class seats, due to increased demand. An increase of 0.7 percent to 2.7 percent is expected.

Airfares in Europe and Asia-Pacific are slated to rise a similar amount, although a weaker Chinese economy may lead to less domestic travel by Chinese businesspeople.

On the rental car front, the forecast calls for rates to remain relatively flat worldwide.

“Based on our data, we don’t anticipate ridesharing or carsharing services to have a great impact on the traditional car rental space with the possible exception of one day rentals,” said Ranney. “Instead, this type of disruption is expected to have a greater impact on taxi and limousine services.”