The 2017 Business Travel Forecast shows costs associated with business travel will be largely unchanged in 2017 but several factors could translate into fewer employees going on the road, according to our Travel Leaders Business Travel Forecast.
The fallout from Brexit, the decision by United Kingdom voters to leave the European Union, a continued slowing of the world economy, a potential decline in U.S. business confidence, lower energy prices and security incidents around the globe such as those we’ve seen in 2016 could lead business travelers to delay or cancel their plans.
In North America, the supply of airline seats is outstripping demand for the first time since the big three carriers emerged from consolidation. At the same time, competition from low-cost carriers will prevent meaningful price increases.
Airfares dropped 7% in 2016 compared with the previous year, and they’re expected to remain flat in 2017. Next year’s average domestic airline ticket should be unchanged at $410.21.
Car Rental Companies
Rental car companies are facing competition from ride sharing services like Uber and Lyft. A modest decline in days rented is projected for 2017, and the average daily rate should remain flat at $38.41.
There’s also less demand for used cars, meaning lower margins from reselling rental fleets. Rental car companies are expected to increase fuel surcharges and one way fees, and new fees.
When it comes to international travel, the outlook for the 2017 business travel forecast is similar in terms of airfares and hotel and rental car rates.
Low cost carriers are bringing super low fares to transatlantic and European markets.
Coupled with tepid economic expansion and the Brexit fallout, airfares in Western Europe are projected to drop by 1 to 3 percent.
In the Middle East, Africa and Asia Pacific, airfares will be flat. While one-time events like the Summer Olympic Games in Brazil helped boost demand, Latin America could see anywhere from a flat rate to a 2 percent decrease. The average international airfare is estimated at $1,559.75 next year.
For the past half-dozen years, hotels have been reaping the benefits of a low supply and high demand. While room capacity has increased, it will take time for the market to adjust.
Rates are projected to rise in Atlanta, Dallas, Denver, Orlando and Seattle, but decline in Charlotte, Houston, Los Angeles and Washington, D.C. The average domestic daily hotel rate should increase about 1 to 2% in 2017, to $154.69.
For hotel rates, the forecast predicts no more than a 1 to 2% increase in Western Europe, flat rates in Asia Pacific and a decrease of 1 to 2% in Latin America, with 4 to 6% reductions in Brazil. The international average daily hotel rate for 2017 is projected at $193.73.
Our 2017 Business Travel forecast expects Slow economic growth, a rise in ride sharing and convenient high speed rail will affect rental car rates in Western Europe next year. (In Latin America, demand for rental cars has historically been low.) The international daily rate is projected to be flat in 2017, at $40.61.
For help planning next year’s business travel program please contact us.