While prices of airline tickets, hotels and car rentals are stabilising, corporate travellers are expected to pay more to travel this year, according to the forecast of ALTOUR 2024.
As the travel management company revealed, the stormy increases in travel costs that preceded the previous two years are expected to subside this year. Leisure travel is returning to pre-pandemic levels and capacity growth across all travel segments is beginning to meet or, in some cases, exceed demand.
However, even with some degree of price stabilisation, the cost of a typical business trip will be 9% to 14% higher in 2024, compared to 2019, before the pandemic, according to ALTOUR’s forecast.
“With rising prices, there are many factors that companies need to consider when booking flights, hotel stays and car rentals,” said Gabe Rizzi, president of ALTOUR. He added: “This is where the expertise of a travel management company like ALTOUR is invaluable. We know what’s happening in each sector of the business travel market and can help your business find the best options within its budget, taking into account the foreseen obligations of care and commitment to sustainability.”
Where the prices of air travel will fluctuate
As far as airlines are concerned, there are already signs that capacity and demand are balancing, which should lead to a slight increase in air fares, or even a decrease in some parts of the world.
Domestic air ticket prices are projected to increase by 2% to 4% on an annual basis. The major US carriers continued to strengthen their domestic hubs, improving the overall strength of their networks.
In markets linked to air hubs, fares could increase by more than 4% simply because of the dominance of one carrier.
Air ticket prices between the US and Europe and Latin/South America are expected to increase by 2% to 5%. While, in other regions, such as the Asia-Pacific region, they could decrease, according to ALTOUR’s forecast.
Negotiations for corporate sales agreements in 2023 resulted in a reduction in discount offers, particularly on domestic travel in the US, which included airline hubs, where limited, where available, bargaining power was recorded.
International, premium travel to competitive markets remains sought after by airlines and is accompanied by better discounts in exchange for increased market share. In some cases, this can be used to take advantage of better discounts for domestic travel, according to ALTOUR.
What is happening with hotel prices
The average daily hotel rate is expected to increase by 2% to 5% annually, at a much slower rate than in 2022 and 2023. However, the average daily price in the United States will be 21.3% higher than it was in 2019. For 2024, ALTOUR’s hotel advisory team forecasts an overall increase in average daily rates of 2% annually across its customer base.
It is important to note that there will be large variations in price changes depending on the city and type of hotel. For example, prices in cities such as New York, London, Chicago, Los Angeles, Chicago and Paris will increase on an annual basis higher than the general price forecast.
The reason is that these destinations combine elements of business travel, meetings/events and leisure travel. This is particularly true for the higher categories of hotels and “big hotels”.
In contrast, for lower-end and limited-service accommodation, price increases will be moderate because the factors that contributed to the full return of this sector to pre-pandemic levels in 2022 are changing. For example, the significant increase in leisure or “revenge” trips is receding. As a result, this hotel segment will become more dependent on business travel.
In fact, ALTOUR’s hotel consultancy team has negotiated fixed rates with some hotels in this category for 2024, with reductions of up to 10%, compared to 2023 rates.
Increased car rental prices
As supply chain problems have subsided, the vehicle stock has improved significantly. However, travellers can still expect to pay 3 to 4% more for car hire this year. Higher labour costs, vehicle purchase costs and inflationary pressures will determine price increases.
Car rental companies continue to expand their electric vehicle offerings, which will help corporate travellers keep up with their corporate sustainability initiatives, according to ALTOUR. However, electric vehicles are 25 to 35% more expensive to rent than their petrol counterparts.
