May 28, 2024

2023 Global Business Travel Forecast

The price of flights, hotels, ground transportation, and meetings and events will continue to rise this year and next, says a report from CWT and the GBTA

Global travel prices will continue to rise significantly in the remaining months of 2022 and throughout 2023, according to a report out today from CWT and the GBTA.

The price of meetings and events is expected to climb particularly sharply this year, while air fares and hotel rates are also being pushed up, driven by soaring fuel prices, staff shortages and inflationary pressures in raw material costs.

According to the 2023 Global Business Travel Forecast, prices will continue to rise next year but not at such a dramatic rate.

“Demand for business travel and meetings is back with a vengeance, of that there is absolutely no doubt,” said Patrick Andersen, CWT Chief Executive Officer.

“Labour shortages across the travel and hospitality industry, rising raw material prices, and greater awareness for responsible travel are all having an impact on services, but predicted pricing is, on the whole, on par with 2019.”

The report says the main forces exerting pressure on the economy and the business travel industry are Russia’s invasion of Ukraine, other geopolitical uncertainties, inflationary pressures, and the risk of further Covid outbreaks that could restrict business travel.

It also highlights that greater visibility at the point of sale for greener travel options, as well as carbon foot-printing and environmental impact assessment, as an opportunity for the travel industry to actively assist in responsible choice-making.

Meetings and events

The cost-per-attendee for meetings and events in 2022 is expected to be around 25% higher than 2019 and is forecast to rise by a further 7% in 2023.

Alongside pent-up demand, corporate events are now competing with many other types of events that were cancelled in 2020.

Demand is also being fuelled by the move to remote working, which means companies are now booking meeting spaces when staff gather in person.

Shorter lead times for events, varying from one to three months versus six to 12 months, are also contributing to this perfect storm, perhaps underscored by corporate concerns that the situation they face today could change very rapidly.

Air fares

Air fares are expected to rise 48.5% in 2022 compared to 2021, but even with this steep price increase prices are expected to remain below pre-pandemic levels until 2023.

Following an increase of 48.5% in 2022, prices are expected to rise 8.4% in 2023.

Premium class tickets comprised over 7% of all tickets purchased in 2019. The share of premium class tickets fell to 6.5% in 2020 and to 4.5% in 2021 but have started to rise in 2022.

Through the first half of the year, premium tickets made up 6.2% of all tickets purchased.

The report says following two years of minimal to no expenditure, business travellers are likely to be willing to spend more on tickets, especially as availability reduces due to labour shortages.

Hotel rates

Hotel prices fell 13.3% in 2020 from 2019 and a further 9.5% in 2021, however the report expects them to rise 18.5% in 2022 followed by an 8.2% lift in 2023.

Hotel prices have already eclipsed 2019 levels in some areas such as Europe, the Middle East & Africa and North America and are expected do so globally by 2023.

Hotel rates have risen sharply in parts of the world including a 22% rise in North America – and a forecast 31.8% across Europe, the Middle East & Africa – driven by an 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 similarly gaining healthy pace, putting further pressure on average daily hotel rates.

Ground transportation

Global car rental prices fell 2.5% in 2020 from 2019, before rising 5.1% in 2021.

Prices are expected to increase 7.3% in 2022, hitting new highs, and rise a further 6.8% in 2023.

The vehicle industry remains capacity constrained and rental agencies that reduced fleet sizes in the wake of the pandemic have not yet fully recovered – due in part to component shortages and supply chain disruptions that have reduced global auto production.

Rental agencies have reverted to buying used vehicles to increase fleet sizes and are keeping their vehicles longer.

Some agencies are also buying vehicles from auto-makers outside of their historically supported brands.

Skyrocketing prices, vehicle shortages and the need for visibility into carbon emissions from door-to-door are driving corporate travel managers to factor ground transport into full trip planning from the beginning.

* The 2023 Global Business Travel Forecast uses anonymised data generated by CWT and GBTA, with publicly available industry information, and econometric and statistical modelling developed by the Avrio Institute.