February 24, 2024

Advito warns of dramatic rise in Europe airfares, but US fares start to stall

Airfares across Europe and to intercontinental destinations will continue to increase this summer, due to low supply and incredibly high demand.

But the latest analysis by Advito, the consulting arm of BCD Travel, shows airfares in the US are stalling and US domestic flights are showing the first sign of decline.

Meanwhile, Asia yields are moderating with the reopening of major markets like China or Japan.

“The gap between travel demand and airline capacity has diminished. This has had a cooling effect on airfares in intercontinental markets,” said Advito’s Air and Hotel Price Index for the third quarter of 2023.

Europe

The consultancy firm expects “dramatic” airfare increases from Europe on all travel sectors – domestic, intraEurope and intercontinental – for the upcoming quarter.

“The 2023 summer travel season in Europe is following the same path as last year which was upended due to labour shortages,” it says.

“This will impact yields with carrier capacity constraints unable to absorb a very strong leisure demand.”

North America

In North America fare growth is starting to slow down.

“North America was the first domestic market to return to a strong activity post-pandemic. This dynamic airfare uptrend might come to an end,” says the report.

“On intercontinental markets, there are clear signs of airfares losing their upward momentum.”

Asia

Airfares to and from Asia are still increasing due to high demand in the context of a gradual restart of international operations, especially in China.

“With travel restrictions lifted throughout Asia, carriers are better balancing demand with additional supply. Airfare growth is really slowing down on all travel sectors, except for Asia to the Southwest Pacific.”

Hotels

Analysis of hotel rates shows inflation, leisure travel and hotel internal costs are driving significant increases in many markets.

Recession fears across the globe and higher than expected rate increases have not led to a slowdown in corporate travel in 2023.

Markets with substantial increases are Berlin, Paris, London, Edinburgh, Madrid, Warsaw, Vienna, Geneva, Zurich, Amsterdam, Brussels, Brno, Athens, and most markets in Italy, Hungary, Croatia, and Turkey.

But most increases in the best available rate have slowed in major markets in the US and Canada.

Shelley Fletcher-Bryant, Advito Senior Director, said other hotel rate analysis showed that it was often better to book late to get the best deals.

“Traditionally, it was always believed that corporates would get the best prices by booking in advance through negotiated rates in their hotel programmes, especially if they want the flexibility to make changes or cancellations, but our research shows that the best deals are available with late bookings and, in fact, only 5% of hotel bookings are actually cancelled,” she said.

“This suggests corporates should now be looking to book later to take advantage of lower, restricted rates or use reshopping technology to make sure they get the best prices.”

Advito advised corporates to look closely at demand for hotels in key destinations to prepare for negotiations.

“Hotels aren’t returning to business at the same pace because some properties and markets are in higher demand than others,” it says.

“Identify your key destinations, including office locations, factory sites, or destinations your business travellers visit the most.

It also advised corporates to access content through a multiple of sources.

“A multi-source strategy gives your travelers access to various rate types, beyond Global Distribution System (GDS) content.

“Suppliers tend to restrict some of the content distributed in the GDS. Offering diverse and rich hotel content signals to travellers that the company offering via their hotel programme is more complete than rates found elsewhere and will ensure they benefit from discounts, even when your own corporate program is not available for booking.”

advito.com

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