February 22, 2024

‘Abnormally high’ intercontinental airfares now ‘back to normal’

The “abnormally high fares” being charged for intercontinental flights last year from North America have now returned to normal, but hotel rates continue to soar.

This is according to findings from Advito’s most recent Q1 Quarterly Price Index report.

Some highlights from this year’s Q1 price index include: 

Flights: 

  • Intercontinental airfares are mainly dropping, driven by a significant airline capacity rebound in Asia and the solid growth of frequencies on the North transatlantic sector.
  • There is a drop in intercontinental airfares from Europe (-6% YOY in Business and -9% YOY in Economy).
  • Intercontinental fares from Latin America are rising (+2% in Economy), with Brazil being the main reason for this increase.
  • Advito is anticipating an overall decrease in intercontinental airfares from North America in Q1 2024 (overall -7% YOY in Business and -9% YOY Economy), particularly to Asia ( -23% YOY in Business and -27% YOY in Economy). This is driven by a strong restart of airline operations to Asia (especially in China) and the Southwest Pacific.
  • Domestic and regional fares have entered a stabilisation phase, and airline capacity recovery is now complete. Strong demand is maintaining fares at a high level. Notable examples include Asia, which sees -2% price drop YOY in Business and -1% YOY in Economy, but overall those figures representing an increase on the last quarter. 

Hotels: 

  • Inflation, leisure travel and internal hotel costs are driving significant cost increases in many markets. Occupancy is down compared to 2022, yet there are higher than expected rate increases, including 11% YOY in Europe and Latin America, and 4% YOY in Asia.
  • However, average daily rate increases seem to be slowing in the first quarter of 2024 as leisure travel is softening, with QOQ price decreases in all markets except the Middle East (1% increase). 
  • According to STR benchmark data, revenue per available room (RevPar) has been record-setting in most markets. 
  • Most increases in the best available rate (BAR) have slowed in major markets, except New York. The increase in the US (3% YOY) is driven by increases in BAR in New York, Chicago, and Las Vegas. 
  • The highest increases in Canada (3% YOY) are driven by significant increases in BAR in Winnipeg and Niagara Falls. 
  • Most markets in North America have not met 2022 occupancy levels to date.

The quarterly Advito report identifies exclusive global market insights in the hospitality and travel industry. 

advito.com

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