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Mon, 4 December 2023

BCD Travel Forecasts Increase in Hotel Rates and Decrease in Airfares in 2024

(04/12/23)  BCD, a travel management company (TMC), has published the fourth edition of its quarterly Travel Market Report.

The Q4 report, dedicated to presenting an outlook for 2024, provides travel managers and buyers with insights on economic prospects, key risks, projected prices for air, hotel and car rental, sustainable travel trends, and more.

Highlights from the report include:

Risks: Specific risks that could undermine or derail economic growth include persistent high interest rates, bond market developments and geopolitical issues. In addition to those macro risks, BCD’s Global Crisis Management team has outlined several key risks that may impact business travel, such as climate change, cybersecurity, geopolitics, health, polarized politics and rising crime. As part of their Travel Risk Management program, travel managers should not only monitor risks, but also stay abreast of any changes to legislation that might directly affect their travelers.

BCD's Travel Market Report includes insights into the recovery of global airline traffic. Click to enlarge.
BCD's Travel Market Report includes insights into the recovery of global airline traffic

Airfares: Recovery in air travel isn’t synchronized around the world. As a result, the factors driving changes to airfares in 2024 will vary by market. In some cases, demand or capacity haven’t yet returned to pre-pandemic levels; in others, the initial rebound may have ended, allowing more normal market conditions to resurface.

Globally, average ticket prices (ATPs) are expected to decrease by 0.8% in 2024. Regional fares should fall by 0.9% and intercontinental fares by 0.5%. At 1.2%, the forecasted fall in global business fares should be steeper than the 0.8% easing expected for economy tickets.

Asia, Europe, Latin America and Southwest Pacific can expect to see ATPs fall by more than 2%. Higher average airfares are only likely in Africa and North America, but the increase in ATPs in those two markets is estimated to be less than 1%.

“Over the past two years, airfares have increased significantly,” said Jorge Cruz, executive vice president of Global Sales & Marketing at BCD. “As a result, using savings as a performance measure has been almost impossible for travel buyers. We advise companies to review their travel policies and their travelers’ booking behaviors to lower the overall cost of their travel programs.”

Hotel Rates: Global hotel rates are expected to rise by 6.8% on average in 2024. Even as the pace of recovery shows signs of slowing, demand will continue to outpace available supply in many markets. Although numerous projects are underway to increase the number of hotel rooms, these will take time to come online, and development will vary greatly by market. In addition, hoteliers’ concerns about occupancy have given way to a sharper focus on average daily rates and revenue per available room (revPAR).

Instead of trying to fill every room, hotels seem more willing to accept lower occupancy, limiting availability and then charging higher rates. With inflation so high in many countries, this change in priorities has the added benefit of lowering hotels’ operating costs. Lower occupancy should allow for lower housekeeping costs, for example.

“Hotels have adopted more sophisticated techniques for revenue and yield management in recent years,” Cruz said. “Available rooms at preferred rates have been increasingly more difficult for business travelers to find. While it’s important for travel buyers to negotiate good rates, it’s equally important for those rates to be available when needed. Otherwise, they end up paying market rates, which will increase the cost of their hotel programs in 2024.”

Sustainability: Two-thirds of travel buyers consider environmentally sustainable travel to be very or extremely important. And almost half have formal goals in place to make corporate travel more sustainable.

“The EU’s Corporate Sustainability Reporting Directive will come into effect in 2024, expanding on existing corporate sustainability disclosures,” said Cruz. “With the U.K., Australia and possibly the U.S. likely to follow, travel suppliers and their corporate clients should anticipate greater demands for data and transparency around their emissions.”

The 18-page, 1.06 MB Travel Market Report can be downloaded for free in .pdf format, here.

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