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Key Ideas
Travel Growth and Predictions: Travel is on the rise, with seat offerings for 2024 expected to be about 2% higher than in 2023, marking an all-time high and surpassing the 2019 benchmark.
Airfare Trends: Average ticket prices have decreased this year, and while domestic airfares in Australia have softened, international airfares are increasing, particularly in the US, Canada, and Brazil.
Car Rental Market Insights: The global car rental market is significant, with expected decreases in rates for APAC in 2024 and 2025, highlighting the importance of including car rental in travel programs.
Hotel Rate Volatility: Hotel rates have increased over the past few years and are expected to continue rising, with occupancy levels returning to normal in key cities, affecting pricing strategies.
Sustainability and Electric Vehicles (EVs): The adoption of EVs in the travel sector is hindered by range anxiety and insufficient charging infrastructure, which must be addressed for successful integration into travel policies.
A summary from the ‘Black Run’ Seminar 1, 'Actionable Data & Intel for your travel program’, at the Australia Corporate Travel Summit on 13 November 2024 presented by FCM Consulting’s General Manager Felicity Burke and Enterprise’s Strategic Sales Director - APAC, Jim Crowder.
Overview
The Seminar focused on key trends and forecasts within the global travel sector, noting a 2% projected increase in seat availability for the upcoming year despite challenges such as inflation and geopolitical unrest. The discussion revealed a decrease in domestic airfares in Australia while international ticket prices remained stable.
The second segment examined ground transportation, pointing out a $134 billion global car rental market, with APAC set to see reduced rates and increased emphasis on customer experience and sustainability.
Lastly, hotel trends indicated rising rates, particularly in major cities, with global occupancy levels stabilising. Attendees were encouraged to shop early for travel arrangements, consider off-peak seasons for events, negotiate hotel rates, and develop long-term travel programme plans. Action items included maintaining close communication with suppliers to better understand customer needs and market fluctuations.
Notes
Global Travel Trends
The importance of adapting travel strategies to changing market conditions and consumer behaviour.
Travel growth: 2% increase in seats offered for next year
Travel growth is projected to see a 2% increase in seats offered for next year.
This growth represents an all-time high in seat availability.
The increase in seat capacity is expected to put pressure on infrastructure and services at airports.
The APAC region is identified as the fastest growing area for airline seats, contributing significantly to this growth.
Global inflation forecast: around 3%
Global inflation is projected to be around 3% for 2024, indicating a moderate economic environment.
This forecast suggests that inflationary pressures may vary across different regions and markets.
The anticipated inflation rate could influence pricing strategies in sectors such as travel, hospitality, and transportation.
Geopolitical unrest and AI impact on travel industry
Geopolitical unrest can lead to increased travel restrictions, affecting flight availability and routes.
AI advancements are transforming customer service in the travel industry, enhancing personalisation and efficiency in booking processes.
Both factors contribute to fluctuating travel costs and changing consumer behaviours, requiring adaptive strategies from travel providers.
Airfares holding, road warriors experiencing fatigue
Airfares are stabilising after previous high prices, providing relief for travellers.
Road warriors, or frequent business travellers, are showing signs of fatigue due to increased travel demands and pressures.
The trend of competitive domestic airfares in markets like Australia suggests potential for cost savings for travellers.
Average ticket prices have decreased
This trend has led to more affordable options for travellers, particularly in domestic markets.
Airfare reductions are expected to continue into 2024, providing further savings for consumers.
Hotel room rates globally have stabilised
Average hotel room rates have increased by approximately 20 to 30 compared to a few years ago, reflecting a return to pre-pandemic pricing levels.
Seasonality trends significantly impact hotel rates, with higher occupancy and rates observed in major cities during peak tourist seasons.
Negotiating with hotels for added value or experiences can help mitigate the effects of rising rates while ensuring traveler satisfaction.
Seat growth forecast: 2% increase into 2025, 4% above 2019 levels
Seat growth forecast indicates a positive trend in air travel demand, reflecting a recovery from the pandemic.
The projected 2% increase in seat capacity for 2025 suggests airlines are responding to rising consumer confidence and travel needs.
With a 4% increase above 2019 levels, this growth highlights the ongoing expansion of the aviation market and potential infrastructure challenges.
Australasia and Middle East increasing seats beyond 2019 levels
Australasia and the Middle East are experiencing a significant increase in airline seat capacity compared to pre-pandemic levels.
This growth is driven by rising demand for both domestic and international travel in these regions.
Airlines are expanding their routes and schedules to accommodate the increased passenger volume, contributing to a more competitive travel market.
Domestic airfares in Australia decreased in first half of 2024
Domestic airfares in Australia have decreased in the first half of 2024 compared to 2019 levels
This decrease follows a period of high prices in 2022 and 2023
The competitive nature of fares in major routes, such as Sydney, Melbourne, and Brisbane, has contributed to this trend
International ticket prices from Australia holding or increasing
International ticket prices from Australia are showing stability and slight increases due to strong demand.
Business class fares are holding steady, while discounted economy fares have seen subtle increases.
The overall trend indicates that international travel demand is rebounding, contributing to the upward pressure on ticket prices.
Ground Transportation Trends
$134 billion global market for car rental/hire
The car rental/hire market is projected to grow as businesses increasingly recognise its importance in travel programs.
Technological advancements are leading to improved customer experiences and streamlined booking processes in the car rental industry.
Sustainability initiatives, including the integration of electric vehicles, are becoming a significant focus for car rental companies.
APAC expected to see decrease in overall rates for 2024 and 2025
APAC is projected to experience a 6.8% decrease in overall car rental rates in 2024.
A further decrease of 3.4% is anticipated in 2025, indicating a trend of stabilising rates.
This decline in rates is attributed to easing car purchase costs, operating costs, and a focus on customer experience.
Car rental companies expanding services (Commercial Vehicles, Mind Spec Solutions, Chauffeur Drive)
Car rental companies are diversifying their offerings to include commercial vehicles, catering to businesses that require larger transport options.
Mind Spec Solutions is being introduced to enhance the customer experience by providing tailored transportation solutions for specific needs.
Chauffeur Drive services are being integrated into rental programs, offering a premium option for business travellers who prefer a more comfortable and convenient travel experience.
Easing car purchase and operating costs contributing to controlled rates
Easing car purchase costs are allowing rental companies to maintain competitive pricing.
Lower operating costs due to improved fuel efficiency and maintenance practices are contributing to stabilized rates.
Increased availability of electric and hybrid vehicles is influencing the overall pricing structure in the car rental market.
Focus on sustainability and EVs, shifted to customer experience
The adoption of electric vehicles (EVs) in the travel industry is heavily influenced by customer experience and range anxiety.
Travel’ers often feel unprepared to drive EVs in unfamiliar cities due to a lack of knowledge about charging station locations.
The current charging infrastructure is insufficient, causing hesitation among business travellers to choose EVs, even if they own one.
Recommendation to book ground transportation through TMC partners
Booking ground transportation through TMC partners can provide actionable data on travel spend.
TMC partners can help streamline the booking process and ensure compliance with travel policies.
Utilising TMC partners can enhance the overall travel experience by providing better options and flexibility for business travellers.
Consider total cost of programme including long-term rentals and leased vehicles
Long-term rentals and leased vehicles can provide cost savings for businesses by reducing the need for frequent short-term rentals.
Incorporating long-term rentals into the travel programme allows for better budgeting and forecasting of transportation expenses.
Evaluating the total cost of ownership, including maintenance and insurance for leased vehicles, is essential for understanding the overall financial impact on the travel programme.
Hotel Trends
Hotel rates have increased and are holding
Hotel rates have increased by approximately 20 to 30 per night compared to a couple of years ago.
Occupancy levels in key cities like New York and London are high, contributing to rising rates.
Contracted rates for hotels are expected to see increases of 1% to 5% as demand continues to grow.
Q3 2024 shows mix of rate movements globally
Q3 2024 has demonstrated varied rate movements across different regions and markets.
Occupancy levels have returned to normal, particularly in key cities like New York and London, contributing to rising hotel rates.
Seasonality trends indicate that rates may spike post-summer in the Northern Hemisphere, while winter months could offer more competitive pricing.
Global occupancy levels returning to normal
Global occupancy levels are nearing pre-pandemic norms, indicating a recovery in the travel industry.
Key cities like New York, London, and Tokyo are experiencing particularly high occupancy rates, driving up hotel prices.
Seasonality trends are influencing occupancy, with fluctuations based on regional demand and time of year.
Key cities like New York, London, and Japan experiencing high occupancy and rates
Key cities like New York, London, and Japan are experiencing high occupancy and rates due to:
Increased demand for travel and accommodation as global tourism rebounds post-pandemic.
Limited hotel supply in these popular destinations, leading to higher prices for available rooms.
Seasonal trends, with peak travel periods driving occupancy rates up significantly during summer months.
Australia and New Zealand Q3 update shows varied rate changes
Australia and New Zealand Q3 update indicates that hotel rates have shown mixed movements across different regions.
Occupancy levels have returned to normal, particularly in key cities like New York and London, driving rates higher.
Contracted rates for hotels in Australia are expected to see increases of 1% to 5% moving into 2025, influenced by high demand in cities like Sydney.
Forecasted rate increases of 1-5% for next year's contracted rates
Increased demand for accommodations in key cities, leading to higher occupancy rates.
Rising operational costs for hotels, including staffing and utilities, contributing to price adjustments.
Seasonal fluctuations in travel patterns, with peak travel periods driving up rates.
Recommendation to shop around for accommodation
Shopping around for accommodation can lead to better deals and savings.
Comparing prices across multiple platforms can uncover hidden discounts and promotions.
Flexibility in travel dates can also yield lower rates, especially during off-peak seasons.
Prices expected to increase in 2025 due to hotel operating costs
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