The true new cost of business travel and events
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 agency CWT and the Global Business Travel Association (GBTA).
Now in its ninth year, the CWT GBTA Travel Price Forecast helps businesses understand market pricing for airfares, hotel room rates, ground transport, and meetings and events.
The forecast, which blends anonymised data generated by CWT and GBTA with econometric and statistical modelling developed by the Avrio Institute, also explores where prices are heading, as well as the drivers of change.
In this article:
Average ticket price growth slows
Rising fuel prices, labour shortages, and supply chain challenges, coupled with red-hot demand, caused air travel prices to skyrocket in 2022.
Lingering economic uncertainty and a gradual easing of supply-side constraints are now expected to result in more subdued price increases over the next 12-18 months, according to the report.
For example, the global average ticket price (ATP) of flights booked for business travel rose by 72.2% year-on-year to $749 in 2022, far surpassing 2019 levels ($670). While demand has recovered strongly, airline capacity continues to be constrained by labour shortages and supply chain issues. This will see ATP growth more modestly (albeit from an already high base), with the report predicting a 2.3% rise this year and a 1.8% rise in 2024.
Still, many corporate buyers now have less leverage to negotiate with airlines, as their travel volumes remain below pre-pandemic levels.
At $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% increase from 2021.
More modest EMEA price increases are expected going forward, with ATPs predicted to rise 2.9% this year and by 2.2% in 2024.
However, in terms of year-on-year growth, the ATP in Asia Pacific saw the biggest increase seen in any region last year, up 148.7% to $567, despite a lack of international travel demand from China.
Average airfares rose 75.3% for Australia and 79.3% for Japan in 2022, with a sharp rise in the share of long-haul tickets, bolstered by visa exemption arrangements.
However, as airlines in the region – particularly the major carriers from China – continue to add more international route capacity, the increased supply should help ease price pressures, with ATPs forecast to only rise 4.8% in 2023 and by 2.7% in 2024.
Hotel ADRs impacted by economic conditions
Like air travel ATPs, the global average daily rate (ADR) for hotel bookings far exceeded earlier predictions, rising 29.8% year-on-year to $161 in 2022.
Occupancy rates have been high, but so have labour, 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 afford to sustain their pricing power for longer, even though ADR gains are slowing.
Global ADRs are now 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% year-on-year to $174. Occupancy in the region is now expected to grow at a slower pace in the second half of 2023 and 2024 due to economic concerns. ADRs are 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% year-on-year 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% in 2023 and 5.6% in 2024.
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Event lead times remain short
In-person meetings and events have rebounded more robustly than many had expected, according to the research. There has also been exceptionally strong demand for incentive trips, as companies seek to motivate and reward employees. CWT Meetings & Events says it has observed these trips becoming longer and more frequent and expects the trend to continue.
The average daily cost per attendee was $160 in 2022. This is expected to increase to $169 in 2023 and then $174 in 2024. The average cost for F&B per attendee meanwhile was $174 in 2022 and is expected to rise to $190 by next year.
Lead times for meetings and events will remain short in this post-pandemic world. However, the report recommends that organisers should now look at 2024 with a 12-month planning cycle if they want to keep prices at a reasonable level.
At the same time, consolidating transient travel and event spending can give buyers more leverage when it comes to negotiating pricing.
A new approach is needed
The 2024 Global Business Travel Forecast further recommends that business travel buyers should maximise data analytics, loyalty schemes and price-tracking algorithms to unearth more opportunities to reduce costs and make savings.
“Test new travel technologies, policies and strategies. Businesses need to think outside the box in terms of where they travel to, where they stay and the types of events they conduct,” the report concludes.
To read the full 2024 Global Business Travel Forecast report, head here.
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