Flight and hotel prices are forecast to rise by more than 8% year on year in 2023 following a sharp recovery from the Covid-19 pandemic.
That is according to the 2023 Global Business Travel Forecast produced by travel management platform CWT and the Global Business Travel Association (GBTA).
CWT and GBTA forecast business travellers will see air fares rise by 8.4%, hotel rates by 8.2%, and car rental charges by 6.8% next year.
The increases will come on top of an estimated 48.5% rise in air fares this year on last, together with an 18.5% increase in hotel rates and a 7.3% rise in car rental charges.
However, CWT and the GBTA estimate air fares fell 26% year on year in 2021 following a 12% fall in 2020, meaning fares this year will still not have returned to the level of 2019 despite a 48.5% hike.
That flies in the face of reports from a series of airlines that they are seeing higher fares this summer than in 2019.
Ryanair reported a “double-digit increase in fares” in the three months to June despite operating 15% more capacity than pre-pandemic.
Lufthansa Group, Air France-KLM and British Airways parent IAG have also reported significantly higher yields on fares this summer than in 2019.
CWT and GBTA’s forecast of increased hotel rates also follows significant declines during the Covid-19 pandemic – a fall of 13% in 2020 and 9.5% in 2021.
The forecast increases for 2023 are below the current rates of inflation in the US, UK and euro zone, with double-digit inflation now expected this autumn.
CWT and GBTA warn global travel prices “are predicted to increase in the remaining months of 2022 and throughout 2023” due to rising fuel prices, labour shortages, and inflationary pressures.
The report notes hotel prices have “already eclipsed 2019 levels in Europe, the Middle East and Africa, and North America”.
Hotel rates have risen 22% in North America and almost 32% across Europe, the Middle East and Africa.
The report estimates costs per attendee for meetings and events this year are 25% higher than in 2019 and will rise a further 7% in 2023.
It notes that aside from pent-up demand for events, many companies have given up office space during the pandemic and are booking meeting spaces for staff to meet in person.
The report also suggests lead times for events have fallen from six to 12 months to one to three months.
Patrick Andersen, CWT chief executive, said: “Demand for business travel and meetings is back with a vengeance. [But] labour shortages across the travel and hospitality industry, rising raw material prices and greater awareness for responsible travel are having an impact on services.”
Global car rental prices fell 2.5% in 2020 before rising 5.1% in 2021 and are expected to increase 7.3% in 2022 and a further 6.8% in 2023.
CWT and GBTA note the vehicle industry remains capacity constrained and rental agencies which cut fleet sizes during the pandemic have not yet recovered due to component shortages and supply chain disruption.
They report rental agencies have been buying used vehicles and keeping vehicles longer to increase fleet sizes.
The 2023 Global Business Travel Forecast uses anonymised data generated by CWT and GBTA, along with economic and statistical modelling by Geneva-based consultancy the Avrio Institute.