Global business travel and events costs are set to climb higher through the remainder of 2023 and into 2024, albeit at a much more moderate pace than the exceptionally steep increases seen in 2022.
This is according to the 2024 Global Business Travel Forecast, published by CWT, the business travel and meetings specialist, and the Global Business Travel Association (GBTA), the world’s largest business travel trade organisation.
Rising fuel prices, labour shortages, and supply chain challenges, coupled with red hot demand, caused travel prices to skyrocket in 2022 – far surpassing some of the increases outlined in last year’s forecast. Lingering economic uncertainty and a gradual easing of supply-side constraints are expected to result in more subdued price increases over the next 12-18 months, according to the report, which uses anonymised data generated by CWT and GBTA, with publicly available industry information, and econometric and statistical modeling developed by the Avrio Institute. ”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,” Patrick Andersen, CWT’s Chief Executive Officer.
“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,” Suzanne Neufang, Chief Executive Officer, GBTA. The global average daily rate (ADR) for hotel bookings exceeded earlier predictions, rising 29.8% YoY to $161 in 2022. Occupancy rates have been high, but so have labor, energy, and food and beverage costs. In fact, 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% in 2023 to $168, followed by a 3.6% increase to $174 in 2024.
North America saw the highest growth in hotel ADRs of any region in 2022, rising 33.8% YoY to $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% to $181 in 2023 and 3.3% to $187 in 2024.
ADRs in Latin America also rose sharply by 26.9% YoY in 2022, as several countries in the region experienced double-digit inflation. Now, with inflation appearing to have peaked, and ADRs are expected to grow by 9.1% in 2023 and 5.6% in 2024.