Small price increases look likely for ground transport throughout 2014, and car rental and rail remain viable alternatives to certain types of air travel. Some markets are seeing increases in car rental prices for the first time in years, and this trend could continue in the near future.
AMSTERDAM – Carlson Wagonlit Travel (CWT) released its 2014 Travel Price Forecast, which shows worldwide travel prices will increase moderately next year, in line with limited economic growth expected across the globe.
In Canada, airfares may only rise as much as 0.6 percent during 2014, while hotel and ground transportation rates climb as high as 3.4 and 2 percent, respectively. While airfares continue to rise, the increase is much lower than it has been over the past couple of years, driven by a highly consolidated and fiercely competitive landscape.
Christophe Renard, vice president, CWT Solutions Group, commented, “While we expect moderate price increases worldwide next year, there are some notable exceptions. Prices in Europe are likely to decrease because of the continued economic uncertainty in the region, while emerging markets such as Argentina could experience far higher increases in 2014 due to high projected GDP growth and significant inflationary increases.”
CWT’s Forecast is divided into four separate sections: air; hotel; ground; and meetings & events, allowing for easy comparisons across regions.
Air projections for 2014
The airline landscape remains dynamic in 2014, as carriers continue to align, whether through code-share agreements, alliances or mergers. At the same time, more low-cost carriers are entering the global stage, applying pressure on legacy carriers’ pricing and offering new products and services geared towards the business traveler.
Key figures:
- Latin America (LATAM) is expected to see a rise of up to 4 percent in air prices overall, with Venezuela and Argentina seeing the largest increases of anywhere in the world; 8 percent and 13 percent respectively.
- The Asia-Pacific (APAC) region could see airfare rises of 4 percent, although prices vary throughout the region; China’s growing middle class will drive significant demand for leisure travel, putting pressure on capacity as the demand for business travel remains persistent. This could result in prices jumping nearly 7 percent in China throughout 2014.
- In Europe, Middle East and Africa (EMEA), prices could rise by as much as 3.1 percent, with airlines based in Germany and Russia influencing price increases across the region’s main economies; prices in Germany could increase by up to 5.4 percent, with Russia seeing increases of almost 8 percent.
- Airfares will potentially increase by around 2.6 percent North America (NORAM) next year. This small rise is due to several factors, including the potential reduction in demand from the U.S. government, driven by its sequestration efforts in the region.
Hotel projections for 2014
Hotels in key business destinations will operate at near capacity throughout 2014. Some destinations will see their highest rate increases in decades, while much of Europe will see a decline due to the ongoing economic uncertainty.
Key figures:
- Hotel rates in LATAM could rise by up to 5.8 percent. As with airfares, CWT expects hotel rates in Venezuela to rise substantially, by as much as 16 percent. Brazil will see the second-highest increase in rates, up to 8.4 percent, thanks in part to the FIFA World Cup in summer 2014.
- APAC’s largest cities have enjoyed the highest occupancy rates in the world for several years. This is set to continue into 2014, with prices set to rise by as much as 4.9 percent.
- Prices in EMEA may decline in 2014. CWT predicts pricing to fluctuate from a 2.5 percent decrease to a 1.6 percent increase. Despite the economic concern, those European cities with high demand will continue to demand healthy price increases, while Middle Eastern hotels increase rates by up to 2.5 percent and properties in Africa likely increase prices by around 2.1 percent.
- NORAM will see hotel rate increases of around 3.9 percent; the United States could see increases of almost 5 percent, but a slight increase in hotel construction in New York City may soften prices slightly in one of the region’s most expensive destinations.
Ground projections for 2014
Small price increases look likely for ground transport throughout 2014, and car rental and rail remain viable alternatives to certain types of air travel. Some markets are seeing increases in car rental prices for the first time in years, and this trend could continue in the near future.
Key figures:
- LATAM could see price increases of up to 3.6 percent in its car rental market next year, while the region’s long-discussed high-speed rail project has yet to come to fruition.
- Prices for car rental in APAC could increase by as much as 5.5 percent, while China’s continually developing high-speed rail infrastructure will see strong interest from travel buyers in 2014.
- Car rental prices across EMEA will vary. Russia, Germany and the UK could see prices increase by 4 percent, while Italy could see prices fall by 1.2 percent, and Spain could see price decreases of up to 4 percent. Meanwhile, Italy’s train system is already beginning to compete with air on some domestic routes, and France’s newly launched low-cost rail provider, Ouigo, could put a similar pressure on airlines in the country.
- In NORAM, price increases of up to 2 percent for car rental are expected, due to increased fleet costs for car rental providers; the small increases mark the first time in years that U.S. suppliers have been able to increase rates.
Meetings & Events projections for 2014
CWT anticipates Meetings & Events (M&E) providers will raise prices around the world next year, resulting in across-the-board increases in daily attendee costs. This could prompt, in many cases, meeting planners to maintain or even cut group size compared to 2013.
Key figures:
- LATAM will see the highest price increases for daily attendees, of 4-7 percent. As a result, group size in the region will fall by as much as 2 percent, and the region may see a switch to domestic instead of international meetings.
- In APAC, a booming M&E industry will see group size increase 3-5 percent, while daily costs per attendee rise 4-5 percent.
- Ongoing economic concerns in the Eurozone are making meeting planners cautious, at the same time as challenging meeting suppliers. Daily attendee costs will remain flat as suppliers reduce their prices to stimulate demand, while attendee numbers could reduce by as much as 3 percent as planners continue to exercise restraint.
- Demand for meeting space continues to outstrip supply in NORAM, with group size increasing by up to 1.5 percent, leading to daily attendee costs rising as much as 5.5 percent.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
