2020 Industry Forecast

from BCD Travel

Industry Forecast Highlights

 Prospects vary for advanced, emerging economies  more ››

Globally, most airfares to rise 1%  more ››

Regional business fares to increase 2%  more ››

Global hotel rates to be 1% to 3% higher  more ››

Oil prices to average US$67 per barrel  more ››

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IndustryForecast2020_icon-air.fw

Air

Growth in global air travel continues to slow. Traffic increased by 4.6% year-over-year during the first five months of 2019, down from 6.8% a year ago.1
Demand is still growing, and together with higher fuel and labor costs, this will ensure that fares rise in most markets in 2020.

However, as airlines continue to add capacity, this will limit fare increases in most markets – but not where demand is particularly strong, such as China and India.

Airfare Forecast

Africa: 1%
Asia: 2%
Europe: 0%
Latin America: 3%
Middle East: 1%
North America: 1%
Southwest Pacific: 1%

Regional air highlights

Africa

Most fares will increase by 1% or 2%, except for intercontinental economy travel, which will remain flat.

Asia

Intercontinental fares will rise by 1%; strong demand in major markets will drive regional fares up by 2% to 3%.

Europe

While most fares will increase, regional economy fares will be flat.

Latin America

Recovering demand will push up regional fares by 3%, but intercontinental fares will be unchanged.

Middle East

Intercontinental economy fares won’t increase. All other fares will rise by 1% or 2%.

North America

Expect fares to rise by 1% in all travel segments.

Southwest Pacific

While regional fares will rise by 1%, increased competition will push intercontinental fares down by 1%.

Airfare forecasts

Intercontinental

Average ticket prices
% change YoY
BusinessEconomy
Africa1%0%
Asia1%1%
Europe1%1%
Latin America0%0%
Middle East1%0%
North America1%1%
Southwest Pacific-1%-1%
Global1%1%

Regional

Average ticket prices
% change YoY
BusinessEconomy
Africa2%1%
Asia3%2%
Europe2%0%
Latin America3%3%
Middle East1%2%
North America1%1%
Southwest Pacific1%1%
Global2%1%

1 IATA, Air Passenger Market Analysis, May 2019

Check out the full 2020 Industry Forecast to obtain detailed supply, demand and pricing projections and deep insights.

IndustryForecast2020_icon-hotel

Hotel

Global hotel rates will increase by 1% to 3% in 2020. Most regions will see average daily rates (ADRs) rise in this range. Rate increases will be higher in Asia, averaging 2% to 4%, as hotel openings fail to keep up with the pace of demand. Latin American hotels will see the smallest rise in ADR, averaging 0% to 2%, due to more modest growth in demand.

Spotlight on Asia

Hotels will keep adding new properties in Asia, but demand will continue to outstrip supply. Rates will rise significantly in Japan, host of the 2020 Summer Olympics.

Hotel forecasts

Average daily rates
% change year over year

Africa1% to 3%
Asia2% to 4%
Europe1% to 3%
Latin America0% to 2%
Middle East1% to 3%
North America1% to 3%
Southwest Pacific1% to 3%
Global1% to 3%

Source: BCD Travel

IndustryForecast2020_icon-econ

Economics

After slowing in 2019, global economic growth will stabilize at 2.8% in 2020. But the prospects for advanced economies and emerging markets are quite different. The performance of the North American economy will continue to weaken, but emerging regions, including Africa, Latin America and the Middle East, can expect growth to strengthen.

201820192020
World GDP growth3.2%2.7%2.8%

Trade conflicts are top concern

A single issue dominates economic fears: trade wars. As growth slows, more countries could become increasingly protectionist, making matters worse.

Economic outlook

Regional economic growth forecasts
2018-2020

201820192020
Africa3.9%4.1%4.3%
Asia5.1%4.7%4.5%
Europe2.0%1.4%1.7%
Latin America1.1%1.5%2.6%
Middle East1.6%0.6%2.1%
North America2.7%2.4%1.6%
Southwest Pacific2.8%2.3%2.6%
World3.2%2.7%2.8%

Source: Oxford Economics, June 2019

Check out the full 2020 Industry Forecast to obtain detailed supply, demand and pricing projections and deep insights.

IndustryForecast2020_icon-oil

Oil price

Experts believe global oil spot prices will range from US$60-$75 per barrel.2 Supply stability seems assured, as OPEC continues to show restraint and rising U.S. output helps to offset Iranian losses. Global oil demand will increase by just 1.4% in 2020, but growth could be weaker if international trade relations deteriorate further. Policymakers may try to stimulate demand but will also be keen to ensure producers commit to pricing stability. Oil prices in 2020 should be in line with the level currently expected for 2019.

2 Economist Intelligence Unit, June 19, 2019

Oil price assumption

US$67 per barrel

Oil prices in 2019

Brent crude spot price per barrel (US$)

January 59.41 US$/ barrel
February 63.96 US$/ barrel
March 66.14 US$/ barrel
April 71.23 US$/ barrel
May 71.32 US$/ barrel
June 64.22 US$/ barrel

Source: U.S. Energy Information Administration, Brent spot per barrel, monthly average

Travel risk and security

Terrorism

Terrorism remains a dynamic global risk, posing a serious threat to employees and companies. Using it to justify investment in travel risk management may overplay its significance as a genuine threat to travelers. The disruption of organized groups like Al Qaeda and the Islamic State means seemingly random attacks by individuals have become the most likely threat in developed countries.
However, incidents this year in Nairobi, Kenya, and Sri Lanka are a reminder that some groups are still capable of launching organized attacks in areas frequented by business travelers.
European and North American security services’ success in thwarting attacks may push terrorists to target other places.

Health

Health risks are always a danger for travelers. According to the World Health Organization, large outbreaks of deadly diseases are becoming the “new normal.” Climate change, rainforest depletion, large and highly mobile populations, weak governments and conflict are making outbreaks of diseases like Ebola, cholera and yellow fever more likely and easier to transmit.
What’s more, low inoculation rates in Europe and North America mean travelers must also contend with diseases such as measles, mumps and rubella that once were considered under control in those areas.

Natural disasters

Whether it’s flooding in South Africa or severe hailstorms in Guadalajara, Mexico, travelers are increasingly faced with disruptions caused by extreme natural events. As most are difficult to predict, the best way to reduce risk is for companies to plan standard responses and prepare travelers for potential crises.

Geopolitics

Populist and often right-wing politicians are being elected around the world. Intent on challenging established practices, this new breed of national leader may disrupt the diplomatic traditions that helped defuse international disputes and support the status quo for decades.
The political doctrines of some of these new leaders and their backers could threaten travelers targeted because of ethnicity, gender or sexual orientation.
In addition, the bureaucratic complexity caused by the U.K.’s muddled exit from the EU means its relations with the rest of Europe in 2020 remain unclear, adding further uncertainty for businesses and travelers. Tensions continue to rise on the Korean Peninsula and, especially, in the Middle East as Iran becomes more isolated.

While terrorist attacks, natural disasters, disease outbreaks and geopolitical events get a lot of attention, and can have a high impact, employers must not forget the daily risks faced by all travelers. They are more likely to suffer from petty crime or illness while on a trip than be involved in a major crisis. Travel managers must plan their response to major events but also provide travelers access to the support they need for these everyday risks.

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