2019 Industry Forecast update

BY BCD TRAVEL RESEARCH & INTELLIGENCE TEAM

Global airfares to increase 1% in most segments; regional business fares set to rise 2%. Hotel rates to be 1-3% higher.

Highlights

Business class fares for regional travel to rise by 2% globally

Fares in other segments to increase by 1%

Hotel rates to increase by 1% to 3%

Oil prices to average US$65 per barrel

Revised forecast.
Arrow shows direction of change.

Air

The pace of expansion in global air travel demand has moderated in recent months. Traffic growth of 6.5% year-over-year during 2018 was down from 8.0% a year ago. 1 This has coincided with signs that global economic growth is slowing. Airlines can continue improving average yields, as long as demand delivers rising load factors. If demand softens at the same time airlines add capacity, the likely result would be lower fares and better corporate discounts in the second half of 2019.

¹ IATA Air Passenger Monthly Analysis, December 2018

Changes are highlighted with bold red text. Arrows indicate in which direction the forecast has moved.

Hotel

Our global rate outlook for 2019 remains unchanged at 1% to 3%.
We adjusted our forecast for the Middle East, after lowering our figures for Saudi Arabia and the UAE because of concerns about over-supply. While our forecasts for all other regions remain unchanged, we made changes to the figures for individual countries, mainly in Africa, Europe and the Middle East.

Changes are highlighted with bold red text. Arrows indicate in which direction the forecast has moved.

Economics

Weaker growth in world trade and a slowdown in the Chinese economy will cause a gradual decline in global economic growth in 2019. Advanced economies, including the U.S. and Eurozone, can also expect a deceleration in growth. Concerns for the global outlook will build if trade tensions escalate into a full-blown trade war.
² Oxford Economics, January 2019

Changes are highlighted with bold red text. Arrows indicate in which direction the forecast has moved.

Oil prices

As global economic growth slows, fears of weaker demand have replaced supply disruption as the main factor influencing oil prices. Between October and December 2018, Brent crude spot prices dropped by 29%, and are now sticking close to US$60 per barrel. Given the mounting risks facing the economic outlook, we decided to revise down our oil price assumption.

Oil prices in 2018

Brent crude spot price per barrel (US$)