Travel prices predicted to rise nearly 4 percent globally, especially in hotels

Norway's hotels, including the Hotel Continental in Oslo, are expected to lead EMEA's hotel prices next year.

According to the GBTA's 2018 Global Travel Forecast, travel prices are expected to rise sharply in the coming year, reaching nearly 4 percent increases in some sectors.

The fourth annual forecast, written by the GBTA Foundation with Carlson Wagonlit Travel and the Carlson Family Foundation’s support, has shown global airfares are expected to rise 3.5 percent in 2018 while hotel prices are expected to be 3.7 percent higher and ground transportation, such as taxis, trains and buses, is expected to rise only 0.6 percent. This is significantly less than the 3 percent inflation forecast for 2018.  

“Geopolitical risks, uncertainties in emerging markets and ever-changing political environments in Europe and the United States mean today’s travel professionals have more than ever to take into account when building their travel programs,” Jeanne Liu, GBTA Foundation's VP of research, said in a statement. “The most successful programs will have to keep a watchful eye on both geopolitical risks and a rapidly-changing supplier landscape as they reevaluate strategy often and adapt as necessary.”  

“The higher pricing is a reflection of the stronger economy and growing demand,” Kurt Ekert, president and CEO, Carlson Wagonlit Travel, added. “The global numbers from this forecast should be considered strong leading indicators of what 2018 will mean for global businesses, as we anticipate higher spending.”  

2018 Hotel Projections  

Globally, the 3.7-percent average increase in hotel prices masks what is actually happening on a regional level. Europe is expected to post strong increases while other regions are barely keeping up with inflation. Additionally, prices are expected to fall in Latin America and the Caribbean. The impact of the 2017 mergers are expected to be felt during the 2018 RFP season.  

Suppliers are progressively moving corporate buyers away from fixed, negotiated hotel rates and toward dynamic rate pricing. There is also a global trend towards “smarter” hotels, with hotels investing in beacon technologies, messaging, in-room entertainment and more. Increasingly tech-savvy guests will use apps to check in and out, unlock their hotel room door, operate the television remotely and control room temperature.

Asia Pacific

Across the Asia Pacific region, hotel prices are likely to rise 3.5 percent–with a large discrepancy as Japanese prices are expected to fall 4.1 percent. However, New Zealand is set to rise a full 9.8 percent. Strong economies means demand is increasing in the APAC region.

Buyers should anticipate a more challenging discussion with newly merged hotel groups, especially in high-volume markets such as Bangkok, Beijing, Shanghai and Singapore.

EMEA

Across EMEA, hotel prices are likely to rise–6.6 percent in Eastern Europe, 6.3 percent in Western Europe, but only a modest 0.6 percent in the Middle East and Africa. Norway is expected to lead with increases of 14 percent expected for 2018 while Russian hotel prices will rise 11.9 percent thanks to increased demand from hosting the 2018 Summer World Cup.   

RevPAR growth is expected for most major cities across Europe in 2018, with Porto and Budapest leading the pack. With its halt on hotel construction, Barcelona may join the top five cities for occupancy rates while Amsterdam has implemented a “hotel stop” policy to limit new hotel development. Dublin is increasing supply through 2020. There has been a large increase in upscale hotel transactions in the United Arab Emirates as oil prices start rising again. Use of sharing economy players will remain limited as governments tighten control.

Latin America

Within Latin America, hotel prices are expected to fall 1.2 percent, with steep declines in Brazil (down 8.7 percent) and Argentina (down 2.3 percent). However, Peru (7.7 percent) and Chile (5.5 percent) are expected to see increases.

Buyers may see efficiencies in 2018 as bigger brands purchase independents and upgrade systems. Capacity is being added throughout the region with an estimated 449,500 new hotel rooms being constructed between late 2016 and 2025–a huge 57-percent increase in supply. Sharing economy accommodations are still not very popular for corporate travel in Latin America, given structural security concerns.

North America

North American hoteliers may be banking on economic growth as demand has leveled off since mid-summer 2016. However, supply is expected to continue growing steadily through 2018. With international travel projected to grow 4 percent in 2017 and 2018, U.S. hotel growth is expected to be concentrated primarily along with the West Coast and in Washington D.C. In Canada, Toronto, Vancouver and Montreal are expected to maintain good pricing power amid a weak Canadian dollar.

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