Get insights into how air, hotel and ground transportation expenses will change, and use this travel forecast to your company’s advantage.
This article was updated October, 2019 .
As your company prepares for 2020, it will need a travel forecast that indicates how business travel expenses will increase or decrease in the New Year.
A new report published by the Global Business Travel Association (GBTA) and others provides a helpful snapshot of what to expect from air, hotel and ground transportation prices in 2020. Here’s a look at those results, plus a rundown of business travel trends to look for in the near future.
Air Travel Forecast for 2020
Look for air expenses to increase only 1.6% globally in 2020 on the heels of a steeper increase in air travel prices in 2019. Of course, the specific increase (or decrease) in air travel cost will depend on the region where you’re traveling.
For example, the cost of air travel is expected to slightly increase in Western Europe (0.5%), Asia Pacific (1.3%), North America (2.3%) and the Middle East and Africa (2.2%). But other regions are expected to see air prices decline slightly, including in Eastern Europe (-0.2%) and Latin America (-1.6%).
What is driving this slight increase in overall air prices? The rising cost of oil is a contributing factor. Oil prices bottomed out in 2016, but they have steadily climbed ever since. Some airlines hedged on oil and locked in low prices for the short-term, while others are paying full price right now — and passing along those high prices to the customer.
But, the increase in air travel costs is only slight due to other factors. As we start to turn the page from 2019 to 2020, there is growing uncertainty in the global economy and we are starting to see a slowdown in growth in some sectors. Also, geo-political concerns (trade wars, free trade agreements, etc.) continue to make front-page news — which can throttle travel price increases.
Given that the prices of both air and hotel are expected to rise in 2020, begin planning around that reality right now. Now is the time to make adjustments to travel policies and expected travel spend based on where it appears prices are heading in 2020.
Hotel Travel Forecast for 2020
Expect hotel prices to modestly in 2020 at a rate of only 1.3%. This comes after our report anticipating a 3.7% rise across 2019.
Again, the spike in hotel prices varies by region. Western Europe (0.7%), Eastern Europe (0.7%), the Middle East and Africa (2.5%), Asia Pacific (1.3%) and North America (2.3%) will see price increases, while Latin America (-0.4%) will experience slight declines in hotel prices.
New airline routes and the increasing number of people flying are creating more demand for hotel rooms, which naturally leads to higher prices. Also, recent mergers and acquisitions (like the merger between Marriott and Starwood) are reducing the number of options travelers enjoy while also reducing competition in the hotel industry — another factor in rising hotel prices.
Again, the slower pace of hotel price increases can be attributed to uncertainty around the global economy as 2020 draws closer.
Ground Transportation Travel Forecast for 2020
Around the world, ground transportation prices are expected to remain relatively stable. Look for a global increase of 1%, with ground transportation prices increasing almost uniformly around the world. The GBTA reports predicts slight increases in Asia Pacific (0.5%), Eastern Europe (1.5%), Western Europe (0.5%), the Middle East and Africa (0.5%), Latin America (1%) and North America (1%).
Despite steady prices, the ground transportation industry remains in flux due to a wide range of issues. For example, consolidation in the rental car sector is leading to higher prices for business travelers. Only 3 rental car companies own 90% of the market in the United States, which dramatically limits competition and places upward pressure on prices.
Other factors influencing ground transportation pricing include greater regulation of ride-hailing apps and car-share services, as well as high-speed rail projects that could disrupt ground transportation markets in the years to come.
How to Plan Around This 2020 Travel Forecast
What should this travel forecast mean for businesses and their leadership teams? Here are 4 things to consider as you evaluate how this travel forecast will impact your company and its traveling employees in 2020:
- Negotiate Rates: Pre-negotiating rates and fares is one of the best ways to keep travel expenses low, even as travel-related prices are growing around the world.
- Consider the Full Cost: The baseline price of a flight, hotel or rental car isn’t the only thing to consider. Look also at the full cost of any itinerary. For example, basic economy airfares may look attractive at first glance, but travelers often incur a number of other expenses when flying in basic economy that mitigate or completely wipe out the initial savings.
- Anticipate Rising Expenses: Air and hotel expenses are likely your 2 biggest spending categories when it comes to business travel. Given that the prices of both air and hotel are expected to rise in 2020, begin planning around that reality right now. Now is the time to make adjustments to travel policies and expected travel spend based on where it appears prices are heading in 2020.
- Use Data to Your Benefit: Monitor your travelers and how much they are spending late in 2019 and into 2020. Ask for and demand detailed data and pricing information from your air, hotel and rental car providers, and use that wealth of information to inform business travel decisions. Today, we can access more data than ever before, but that data does no good unless it leads to cost-saving action.
There’s plenty of time to act before 2020 begins, which means you have plenty of time to plan around these expected changes. Take into account the 4 suggestions above, and refer back to this GBTA report if you want more information.
Use a Common Sense Approach to Business Travel
At JTB Business Travel, we help our clients with a wide range of services, including the negotiation of rates and fares and the implementation of strategies that reduce overall travel spend. Behind everything we do is a common sense approach to business travel.