Travel Industry Forecast

Advito Predicts Modest Rise in Global Hotel Rates and Stable Airfares in 2017 Industry Forecast Update

HTrends

The spring travel outlook brings good news to global corporate travel and procurement departments, according to the quarterly update to Advito’s 2017 Industry Forecast. There are new opportunities to strengthen traveler engagement programs; airfares will fall or remain flat in most market segments; and expected rises in hotel rates have diminished in some markets, with lower prices now predicted for the Middle East.

“While there is relative travel price stability around the world, it’s an ideal time for companies to turn their attention to other ways to impact travel program performance besides supplier management and policy changes. It’s time to influence traveler behavior by applying tried and true digital marketing practices to your travel program,” says Vice President Jeroen Hurkmans. Travel managers should be using the same tactics on their travel programs that retailers use to influence consumer behavior.

“Just as every travel program has a business plan, it should also have a marketing strategy specifically designed to support those goals,” says Advito Principal and Vice President Bob Brindley. “That marketing strategy should not only push information to travelers to help them make better buying decisions, but also solicit their feedback. Travelers are more likely to engage with a program that makes them feel valued and listens to their feedback.”

In addition to spotlighting opportunities around traveler engagement, Advito’s March Update addresses specific global travel trends for hotel and air:

Hotel Trends

Advito changed its hotel rate forecasts for three regions:

  • In North America and Africa, the upper limit for the forecast range has been lowered, meaning prices should not rise as much as previously anticipated.
  • In the Middle East, softer demand is coinciding with increasing supply. With rates now expected to decrease in Oman, Qatar, Saudi Arabia and the U.A.E., Advito changed its rate outlook for the region from a previously predicted rise of 2% to 4% to a drop of -3% to -1%.

Overall in the hotel sector, these revisions offset one another and the global rate outlook remains the same.

Air Trends

Global air travel demand continues to strengthen, with traffic growth hitting a 10-month high of 8.8% year-over-year in December 2016, according to IATA. A pick-up in the economic cycle is supporting international air travel, although the performance of key domestic markets is mixed. The capacity growth that low oil prices encouraged has pushed down average fares in many markets. Airlines are trying to stabilize prices, and may soon resort to capacity adjustments to get some upward movement in pricing in 2017.

  • Notably, Advito lifted its prediction for regional business travel fare increases to 2% for North America and the Middle East. It also revised its outlook for Latin America intercontinental economy fares to a 1% decrease.
  • In the Middle East, per the original forecast, airline expansion will ensure that economy fares fall this year. Yet due to strengthening demand, Advito has adjusted its regional business fares forecast for this market, changing the predicted rise from 0% to 2%.

Economic Growth

The outlook for the world economy is holding steady. A small improvement in the outlook for advanced economies has offset a downgrade in growth forecasts for some emerging markets.

Oil Prices

The original oil price assumption of US$50 per barrel has not changed.

The consultancy’s parent company, BCD Travel, developed a white paper, “Get Engaged: Empowering Travelers to Make Smart Buying Choices,” that offers additional information.



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