If your are a business traveler flying business class to or from North America in 2018, you should expect to pay higher airfares.
That’s one takeaway from American Express Global Business Travel’s new annual forecast, released earlier this week. Long-haul business class airfares to and from North America are slated for increases of 3 to 5 percent. Among airlines, pricing for ancillary products are expected to rise, as well, and put pressure on travel budgets.
By all indications, we’re in the midst of a business travel boom in regions across the world. With increased demand comes slightly higher prices, though.
American Express Global Business Travel found that hotels rates, airfares, ground transportation costs, and even train fares are expected to rise throughout 2018.
Asia-Pacific will undergo the smallest increases globally, however, with prices relatively flat year-over-year. Economy-class travel prices in the Middle East and Africa, as well, could decline slightly over the course of the year.
Among airlines, pricing for ancillary products are expected to increase even further and put pressure on travel budgets. Long-haul business class will also see prices increased by airlines, with flights to and from North America slated for a 3 to 5 percent increase.
“Demand for air travel is rapidly expanding and while fares are expected to rise in every region, overcapacity on some routes, aggressive expansion by low-cost carriers, and historically low oil prices should keep price increases in check,” reads the report’s executive summary. “However, while only modest fare increases are expected, airlines will continue to drive revenues through the expanded use of ancillary fees, which generated a remarkable $82.2 billion in 2017.”
On the hotel front, room rates are expected to remain high in the cities with the most demand. Dynamic pricing, and increased consolidation, will also contribute to stronger pricing power for hotels. Hotel rates worldwide are expected to jump between 2 and 3 percent this year.
Hotel rates were relatively flat in 2017, but 2018 is likely to see more attempts by global brands to drive increased revenue, according to American Express Global Business Travel.
Car rental rates are expected to increase slightly, depressed by surging demand for ridesharing platforms. Fragmentation in Latin America and Asia will keep rates from rising too high. On the ridesharing front, increased competition with Uber will also keep fares low.
Check out the full forecast below.