Geopolitical uncertainties are singled out in the latest Global Business Travel Forecast, which underscores the volatility the corporate travel industry is experiencing, and perhaps the pointlessness of trying to predict prices in the first place.
While travel prices may not spiral out of control as much as they did in 2022, many factors that impact costs will simply remain out of the hands of travel managers.
Next year could see even more price fluctuations due to geopolitical events, a new report from corporate travel agency CWT and the Global Business Travel Association has warned.
The pair projected back in November 2021 that air fares would rise 3.4 percent in 2022, with that estimate published just months before Russia invaded Ukraine — an event that contributed to jet fuel price increases that were handed down to passengers.
However, the actual rise of the average air fare is expected to be 48.5 percent for 2022, CWT and the association have stated in this year’s joint Global Business Travel Forecast, published Wednesday.
“There are three main forces exerting pressure on the economy, and conversely, the business travel industry,” the report said. “Russia’s invasion of Ukraine, coupled with other geopolitical uncertainties; inflationary pressures that are pushing costs higher; and the risk of further Covid outbreaks that could restrict business travel.”
Speaking to Skift ahead of the report’s publication, one senior exec warned more implicitly that travel managers should keep track of the rising tension between China and Taiwan. Taiwan’s foreign minister on Tuesday said China’s recent military maneuvers were a game-plan to prepare for an invasion.
“As well as the war in Ukraine, you need to keep an eye on what’s happening in Taiwan with China,” said Richard Johnson, senior director, CWT Solutions Group. “Drawing parallels with what’s happening in Ukraine and Russia at the moment, if there were to be an invasion of Taiwan, that could potentially impact demand for inbound and outbound business travel to and from China.”
One knock-on effect is that airlines would see demand reduced, particularly if there was an embargo, as well as safety risks.
With prices reduced in certain markets, Johnson said vendors would need to recoup their losses.
“You might start to see an offsetting of the reduced demand in such a massive economy as China, by prices increasing elsewhere,” he added. “It’s a difficult one to predict.”
Air fares are predicted to rise 8.4 percent in 2023, according to the Global Business Travel Association.
Meanwhile, hotel prices are expected to rise 18.5 percent in 2022, up to $147 per night — a notable difference on the original 13 percent prediction the annual report made in November last year.
They’re forecast to go up by a further 8.2 percent in 2023. “Hotel prices have already eclipsed 2019 levels in some areas and will do so globally by 2023,” the report said.
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Photo credit: Corporate travel agency CWT has warned travel managers to keep a watchful eye on the rising tension between China and Taiwan (pictured). Ethan Lin / Unsplash