Although at a more blunted pace, 2024 Global Business Travel Forecast by CWT and GBTA suggests that global business travel and events costs are set to shoot up through the remainder of 2023 and into 2024.

With the tourism industry regaining its momentum, global business travel and events costs are set to climb higher through the remainder of 2023 and into 2024. However, the rise will be at a more moderate pace compared to the steep rise seen in 2022, says 2024 Global Business Travel Forecast, published by US-based travel management company CWT and the business travel trade organisation Global Business Travel Association (GBTA).

According to the report, many factors including rising fuel prices, labour shortages and supply chain challenges, coupled with red hot demand, caused travel prices to skyrocket in 2022. It far surpassed some of the increases outlined in last year’s forecast.

“A potent combination of demand and supply-side pressures propelled travel prices higher than expected last year. Looking forward, prices seem to be levelling off with much milder increases projected over the next 12 to 18 months. We could now be looking at the true new cost of travel. Our focus remains on helping our customers find the right strategies and solutions to get the most out of their travel budgets, meet their ESG commitments, and maximise the ROI on their travel spend,” says Patrick Andersen, CWT’s Chief Executive Officer.

The report adds that lingering economic uncertainty and a gradual easing of supply-side constraints might result in more subdued price increases over the next 12-18 months. The statement adds that the study was collated using anonymized data generated by CWT and GBTA, with publicly available industry information, and econometric and statistical modelling developed by the Switzerland-based entrepreneurship school Avrio Institute.

“As this research outlines, it’s clear that rising costs and pricing pressures will likely continue to be a significant factor in business travel for the foreseeable future. And as we experienced over the past few years, we may also continue to see different pricing fluctuations across industry verticals, business sectors and global regions. While business travel continues to rebound, there will be a continuing balancing act among demand, cost, and ESG concerns. So, with a forecast ahead for more volatility, our goal is to provide insights like these to help travel buyers, suppliers, intermediaries and finance executives continue to understand, evaluate and adjust their business travel strategies,” adds Suzanne Neufang, Chief Executive Officer, GBTA.

Airfares continue to rise

According to the report, the global average ticket price (ATP) of flights booked for business travel rose dramatically in 2022, experiencing record price increases. ATP rose by 72.2 pc YoY to USD 749 in 2022, far surpassing 2019 levels of USD 670. While demand has recovered strongly with passenger numbers quickly approaching pre-pandemic levels, driven primarily by pent-up leisure travel demand, airline capacity continues to be constrained by labour shortages and supply chain issues, says the statement.

In terms of year-over-year growth, the ATP in Asia Pacific climbed 148.7 pc YoY in 2022 to USD 567. The report suggests that this is the biggest increase seen in any region, despite a lack of international travel demand from China. Key business travel destinations, including Australia and Japan, fully reopened to vaccinated travellers and resumed visa exemption arrangements. Average airfares rose 75.3 pc for Australia and 79.3 pc for Japan in 2022, with a sharp rise in the share of long-haul tickets. As airlines in the region continue to add more international route capacity, the increased supply might ease price pressures in the region, with ATPs forecast to rise 4.8 pc in 2023 and 2.7 pc in 2024, says the report.

It adds that ATP growth is likely to be more modest at 2.3 pc in 2023 and 1.8 pc in 2024, albeit from an already high base. Still, many corporate buyers now have less leverage to negotiate with airlines, as their travel volumes remain below pre-pandemic levels.

At USD 855, the Europe, Middle East, and Africa (EMEA) region recorded the highest ATP in 2022, compared to other parts of the world. This represents a 31.5 pc increase from 2021. More modest price increases are expected going forward, with ATPs predicted to rise 2.9 pc this year and 2.2 pc in 2024.

Hotel tariffs to rise further

The report says that like air travel ATPs, the global average daily rate (ADR) for hotel bookings exceeded earlier predictions, rising 29.8 pc YoY to USD 161 in 2022. Occupancy rates have been high, but so have labour, energy and food and beverage costs. Several cities across the globe including London, Miami, and Singapore, reported their highest ADRs on record in 2022.

Meanwhile, hotel construction remains down from its pre-pandemic peak, creating supply constraints. With fewer properties to compete against, existing hotels can sustain their pricing power for longer, even though ADR gains are slowing. ADRs are projected to climb a further 4.3 pc in 2023 to USD 168, followed by a 3.6 pc increase to USD 174 in 2024, says the report.

It adds that North America saw the highest growth in hotel ADRs of any region in 2022, rising 33.8 pc YoY to USD 174. Occupancy in the region is expected to grow at a slower pace in the second half of 2023 and 2024 due to economic concerns, with ADRs forecast to rise 4 pc to USD 181 in 2023 and 3.3 pc to USD 187 in 2024.

ADRs in Latin America also rose sharply by 26.9 pc YoY in 2022, as several countries in the region experienced double digit inflation. Now, with inflation appearing to have peaked, ADRs are expected to grow by 9.1 pc in 2023 and 5.6 pc in 2024.

2.1 pc price rise ground transportation predicted

The report says that car rental supply has been constricted as companies sold vehicles during the pandemic when demand collapsed. As business returned, vehicles were not replaced at pace due to supply chain issues, largely due to a worldwide shortage of vehicle semiconductors which led to inflated vehicle prices. These factors have contributed to prices rising by 9.8 pc YoY in 2022, with a further 6.7 pc increase forecast this year. Pricing growth is expected to cool to 2.1 pc in 2024.

Costlier meetings and events 

In-person meetings and events have rebounded more robustly than many had expected. According to the report, client acquisition and relationship building are key business goals that are not easily executed virtually. There has also been exceptionally strong demand for incentive trips, as companies seek to motivate and reward employees. In fact, CWT Meetings & Events has observed these trips becoming longer and more frequent and expects the trend to continue.

It goes on to say that the average daily cost per attendee was USD 160 in 2022. This is expected to increase to USD 169 in 2023 and then USD 174 in 2024.