Business Travel Isn’t Expected to See Big Price Hikes Next Year

As travel managers look ahead to 2017, one sure thing awaiting them is uncertainty.

Security concerns are roiling the globe, financial markets are unpredictable, and the world is watching to see how Britain and the European Union will proceed without each other.

Despite all the chaos, there is a bit of good news for travel budgets. Research released last week by the education and research branch of the Global Business Travel Association shows that prices for business travel are expected to either stay unchanged or increase only slightly.

The 2017 Global Travel Price Outlook, a collaboration between the GBTA Foundation and travel management company Carlson Wagonlit Travel, provides projections on air travel, hotel, ground transportation, and meeting and event prices.

Global airline prices are expected to increase by 2.5 percent next year, though the report says some markets may see fares lower than they were in 2015. But ancillary fees, which increased to 7.8 percent of global airline revenue last year, are expected to make up an even larger share moving forward.

Experts believe hotel prices will fall in regions including Asia Pacific, Eastern Europe, Middle East, Africa, Latin America, and the Caribbean. Western Europe prices are expected to increase less than 2 percent, while rates in North America are forecast to be up 4 percent driven by demand on the West Coast.

The report says major hotel mergers including the Accor purchase of Fairmont and Marriott’s acquisition of Starwood will likely not affect hotel prices until 2018. In the meantime, home-sharing services such as Airbnb are threats to hotel companies even if they are not yet in heavy rotation for business travelers.

“While prevalence and impact varies by market, sharing economy properties are a legitimate competitor for many hotel properties around the world,” the report says. “Traditional chains are looking at how they can penetrate this market, yet hotel services such as room service, laundry, security, and more, remain important to corporate travelers.”

The cost of ground transportation, thanks to “an intensely competitive climate,” is expected to remain flat.

As ride sharing options such as Uber and Lyft become more popular, car rental companies are trying to improve their products with mobile apps that provide a more convenient experience as well as fuel monitoring technology, according to the report.

“At the same time, car rental companies, taxis and black car/sedan companies may feel a collective boost given a recent push by government officials in various markets to regulate ridesharing services more consistently with other ground transportation providers,” the report said.

Meeting and event costs per attendee per day are projected to show “modest” increases  in Asia Pacific and North America while dipping in Latin America and staying flat in Europe.

Along with the price forecasts, the outlook highlighted risks that could affect travel costs and the world’s economy in general: emerging market performance, financial market turbulence, geopolitical risks, uncertainty surrounding Brexit, potentially fluctuating U.S. interest rates, and oil prices.

“While business travel repeatedly demonstrates its resilience, the high level of global uncertainty we face heading into 2017 means travel buyers have to be more nimble and flexible than ever in crafting travel programs,” Jeanne Liu, GBTA Foundation vice president for research, said in a statement. “The outlook shows only marginal increases or flat travel prices, but for 2017, the key to building successful travel programs will be watching and reacting to an ever-changing global landscape.”