Low oil prices, increased capacity keep airfares relatively flat
Advito releases 2016 Industry Forecast for business travel
Copenhagen, September 8, 2015 – Stable oil prices and increased capacity will keep airfares essentially flat in 2016, according to travel consultancy Advito’s just-released 2016 Industry Forecast. The supply increase ensures that air fares won’t rise in most markets, and may even go down in regions where competition is most intense. Airfares could rise or fall very quickly, however, if oil prices go up or down.
“While we expect global airfares to remain flat in 2016, corporate travel buyers should expect some regional variation in pricing.” said Bob Brindley, principal at Advito. “More than ever, air market conditions vary by route. So it’s especially important for companies to understand precisely where they’re spending the most and whether cheaper alternatives exist.”
In 2016, Advito expects global economic performance to accelerate as both emerging and advanced markets grow. Likewise, Advito predicts that a rebound in the the U.S. economy and a steady recuperation of the euro zone will drive a stronger contribution from the advanced economies. Recovery in Latin America will be a key factor for emerging markets, as growth returns to the Brazilian economy and accelerates in Argentina and Chile. Economic risks like the Greek debt crisis or the sluggish Chinese economy could derail this outlook.
Advito’s 2016 Industry Forecast is now organized by seven regions: North America, Europe, Asia, Latin America, the Middle East, Africa, and Southwest Pacific. Advito provides analysis of air, hotel, meetings and ground spend categories for each region. The forecast also features a series of market spotlights for specific air routes, cities and countries relevant to each region.
A few of the forecast’s key observations include:
Business fares will be stable in North America, Europe and Asia, but they’ll fall by 2% to 3% for intercontinental travel in the rest of the world. For regional trips within Latin America and Southwest Pacific, business fares are likely to rise.
Economy fares will fall in most markets, with the biggest decreases likely in Africa and the Middle East. They should only increase in North America and Latin America in response to strong demand for regional travel in these markets.
Three regions will drive the 3% to 5% rise in average global hotel rates in 2016. As demand recovers in North America and Europe, a lack of new supply will help hotels increase prices. Rate growth will also be strong in Latin America, reflecting the continued strength of demand. However, widespread openings, particularly in China and India, will ensure lower average rates prevail in Asia.
Advito monitors changes in economic growth, inflation, travel demand and oil prices. Each quarter, it revises its annual Industry Forecast to reflect changes to the original air and hotel pricing predictions for the year.
The Advito 2016 Industry Forecast is available at www.advito.com (in the Insights section under “White Papers”). The forecast methodology can be found on page 65 of the publication.