As demand increases, so does the cost of business travel.

According to the Global Business Travel Forecast 2023, published by CWT and the Global Business Travel Association (GBTA), the cost of international travel is predicted to continue to increase for the remaining months of 2022 and 2023.

Rising oil prices, labor shortages and inflationary pressures on raw material prices are the main factors behind the expected price growth, the report said.

advertisement

“Demand for business travel and meetings is back with a vengeance, there’s no doubt about that,” said CWT CEO Patrick Anderson. “Job shortages in the travel and hospitality industry, rising commodity prices and heightened awareness of responsible travel are all impacting services, but forecast prices are generally flat for 2019.”

In the year In 2020, the world economy shrank by 3.4%. The worst recession since World War II. Service sectors, including travel and hospitality, were particularly hard hit, but the global economy recovered quickly. It will peak in 2020 and grow by 5.8% in 2021.

Economic growth is moderate as the recovery drags on, although another recession is looming. The current base case for 2022 is for 3% growth, followed by 2.8% growth in 2023.

Corporate events

For meetings and events, according to the report’s authors, prices have increased in most spending categories in all regions, driven by demand, the desire to build company culture and an uncertain economic outlook. Spending on meetings and events is expected to be 25% higher in 2022 than in 2019, and is forecast to grow an additional 7% in 2023.

Air tickets
In 2020, business airfares dropped more than 12 percent from 2019, followed by a further 26 percent decrease in 2021. Economy ticket prices dropped more than 24 percent from 2019 to 2021, and premium tickets dropped 33 percent. Prices are expected to increase by 48.5% in 2022, but even with this large price increase, prices are expected to remain below pre-pandemic levels until 2023, the CWT/GBTA report says. Following a 48.5% increase in 2022, prices are expected to rise 8.4% in 2023.

Premium class tickets accounted for more than 7% of all tickets purchased in 2019. The share of premium class tickets dropped to 6.5% in 2020 and 4.5% in 2021, but started to increase in 2022. It accounted for 6.2 percent of all tickets purchased. As the average ticket price includes economy and premium, it says that increasing the share of premium class tickets results in a higher average price.

International and cross-border bookings are recovering in most regions, resulting in higher international bookings and correspondingly higher average ticket prices, despite the uncertainty caused by the war in Ukraine. With two years of low and zero costs, business travelers may be willing to spend more on tickets, especially as supply decreases due to labor shortages.

Hotel
Hotel prices fell by 13.3% in 2020 from 2019 and a further 9.5% in 2021, however, the report expects them to rise by 18.5% in 2022 and 8.2% in 2023. , the Middle East and Africa and North America and is expected to do so globally by 2023.

Hotel prices rose sharply in other parts of the world, including a 22% increase in North America – and a 31.8% forecast across Europe, the Middle East and Africa – due to accelerated recovery coupled with continued capacity constraints.

Hotel rate increases were initially driven by strong leisure travel in 2021, but group travel for corporate meetings and events is improving and transient business travel is gaining at a similarly healthy pace, putting additional pressure on average daily hotel rates.

Car rental

Global car rental prices fell 2.5% in 2020 from 2019, before rising 5.1% in 2021. Prices are expected to rise 7.3% in 2022, reaching a new high, and rise a further 6.8% in 2023.

The auto industry has yet to fully recover from capacity constraints and leasing agencies that reduced fleets following the pandemic — partly because shortages and supply chain disruptions have slowed global car production.

Rental agencies have returned to buying used vehicles to increase fleet size and are keeping their vehicles longer. Some agencies are buying vehicles from automakers outside of their historically supported brands.