United Kingdom
News Release
CWT Releases 2014 Travel Price Forecast, Giving Clients Early Indications on Costs to Help Them Plan AheadEurozone remains unsettled, while Asia-Pacific and Latin America face price rises
AMSTERDAM, July 30, 2013 — Carlson Wagonlit Travel (CWT) today 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 the UK, airfares could rise by as much as 3.5 per cent, but hotel rates will remain largely flat, possibly even shrinking nearly 2 per cent because of additional accommodation available after last year’s London Olympics. Those wishing to rent a car could expect to pay up to 2 per cent more than they did in 2013, and rail prices could increase by 6 per cent, the highest increase across Europe.
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 traveller.
Key figures:
• In Europe, Middle East and Africa (EMEA), prices could rise by as much as 3.1 per cent, 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 per cent, with Russia seeing increases of almost 8 per cent.
• Latin America (LATAM) is expected to see a rise of up to 4 per cent in air prices overall, with Venezuela and Argentina seeing the largest increases of anywhere in the world; 8 per cent and 13 per cent respectively.
• The Asia-Pacific (APAC) region could see airfare rises of 4 per cent, 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 per cent in China throughout 2014.
• Airfares will potentially increase by around 2.6 per cent North America (NORAM) next year. This small rise is due to several factors, including the potential reduction in demand from the US 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:
• Prices in EMEA may decline in 2014. CWT predicts pricing to fluctuate from a 2.5 per cent decrease to a 1.6 per cent 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 per cent and properties in Africa likely increase prices by around 2.1 per cent.
• Hotel rates in LATAM could rise by up to 5.8 per cent. As with airfares, CWT expects hotel rates in Venezuela to rise substantially, by as much as 16 per cent. Brazil will see the second-highest increase in rates, up to 8.4 per cent, 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 per cent.
• NORAM will see hotel rate increases of around 3.9 per cent; the United States could see increases of almost 5 per cent, 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:
• Car rental prices across EMEA will vary. Russia, Germany and the UK could see prices increase by 4 per cent, while Italy could see prices fall by 1.2 per cent, and Spain could see price decreases of up to 4 per cent. 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.
• LATAM could see price increases of up to 3.6 per cent 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 per cent, while China’s continually developing high-speed rail infrastructure will see strong interest from travel buyers in 2014.
• In NORAM, price increases of up to 2 per cent 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:
• 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 per cent as planners continue to exercise restraint.
• LATAM will see the highest price increases for daily attendees, of 4-7 per cent. As a result, group size in the region will fall by as much as 2 per cent, 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 per cent, while daily costs per attendee rise 4-5 per cent.
• Demand for meeting space continues to outstrip supply in NORAM, with group size increasing by up to 1.5 per cent, leading to daily attendee costs rising as much as 5.5 per cent.
Further insight into 2014 travel prices
CWT’s forecast addresses additional factors that can directly affect overall travel spend and traveller satisfaction, such as safety and security and use of technology. Please visit CWT’s website to view the 2014 Travel Price Forecast in full.
Forecast methodology
The projections in this forecast were formed in collaboration with CWT Solutions Group, from the combination of a.) a statistical model created by an economics professor at the University of California at Los Angeles, that evaluates historical price behaviour and forecasts future price references; b.) market-specific expertise and travel industry knowledge of CWT personnel worldwide; and c.) macro-economic information sourced from IHS Global Insight, the International Monetary Fund Research Department, the United Nations, and others. Projections were calculated based on the transaction data of CWT’s global client portfolio, including clients’ travel footprints and patterns, over the past six years. Additionally, key macroeconomic and per-country indicators, such as current and expected gross domestic product (GDP) growth, the consumer price index, unemployment rates, and crude oil prices, were used in CWT’s statistical model. Country-level ranges are indicative of variations among markets within each country and variations among different categories of service. All air statistics represent Point of Origin and include all trip types (long and short haul/domestic, continental, and intercontinental).
About Carlson Wagonlit Travel
CWT is a global leader specialised in managing business travel and meetings and events. CWT serves companies, government institutions and non-governmental organisations of all sizes in more than 150 countries and territories. By leveraging both the expertise of its people and leading-edge technology, CWT helps clients derive the greatest value from their travel programme in terms of savings, service, security and sustainability. The company is also committed to providing best-in-class service and assistance to travellers. In 2012, sales volume for wholly owned operations and joint ventures totalled US$27.7 billion. As part of its commitment to responsible business, CWT is a signatory of the United Nations Global Compact Ten Principles. For more information about CWT, please visit our global website at www.carlsonwagonlit.com. Follow us on Twitter @CarlsonWagonlit.
Media contact
Carrie-Ann Cooper
CWT Global
+44 (0)20 3353 1110 (office)
+44 (0)7785 458 884 (mobile)
[email protected]
