In recent years, global business travel pricing has reached a new and enduring peak. While prices will increase in 2025, the growth will be more moderate, ushering in what experts describe as “normalized growth,” said travel management company CWT in its tenth annual forecast.
The report, created in collaboration with the Global Business Travel Association (GBTA), highlights that although costs will continue to climb, the rate of these increases will significantly slow through 2024 and into 2025. The forecast includes slight upward trends in airfare, hotel rates, and car rentals worldwide.
Here’s a brief summary of the report’s predictions:
Airfare
The global average ticket price was $668 in 2023, marking a 1.6% decrease. For Europe, the Middle East, and Africa (EMEA), the average ticket price stood at $785, a slight increase of 1.8%.
Looking forward, 2024 will see a rise to $701 globally and to $797 in the EMEA region, marking growth rates of 1.9% and 1.5% respectively. By 2025, prices are predicted to reach $705 worldwide and $808 in EMEA, with modest growth rates of 0.6% and 1.4%.
Hotel Rates
Globally, the average daily hotel rate was $158 in 2023, an increase of 3.9%. The EMEA region demonstrated a higher increase of 6.8%, bringing daily rates to $157.
Projections for 2024 set the global rate at $162 and EMEA at $160, with growth of 2.5% and 1.9% respectively. In 2025, global rates are predicted to rise to $165, while EMEA will see a rise to $163, reflecting a 1.9% and 1.8% growth.
Car Rentals
Average daily global car rental rates reached $44.30 in 2023, up by 3%. In the EMEA region, rates were slightly higher at $57, with a 2.5% increase. Forecasts show that in 2024, global rates will climb to $45.40, and EMEA rates will rise to $57.6, indicating growth of 2.5% and 1.1%. By 2025, rates will further increase to $46.50 globally and $58.1 in EMEA, with growth rates of 2.4% and 0.9%.
While pricing across major travel categories is levelling out, experts caution that the situation remains precarious. Nicholas Vournakis, Chief Customer Officer at CWT, warned that this environment, characterized by small gains and price stability, is fragile.
“There are many factors at play, whether its volatile oil prices, labor costs and constraints, inflationary pressures, and geopolitical factors,” he added.
Airfare, Hotel Rates, and Ground Transportation: More Findings
In this section, we’ll discuss the evolving landscape of business travel expenses, examining key factors such as airfares, hotel rates, and ground transportation costs, as presented by CWT. In 2023, they observed significant regional variations in pricing, influenced by post-pandemic demand shifts and supply challenges.
Projections indicate a gradual upward trend from 2024 through 2025, highlighting steady increases in ticket prices, daily room rates, and rental fees. As travel regains momentum, businesses need to adapt strategies to manage costs effectively and capitalize on emerging opportunities.
Air Travel
- The global average ticket price witnessed a minor reduction in 2023 but is expected to increase to $701 in 2024 and $705 in 2025.
- EMEA’s ticket pricing will experience modest growth over the next few years.
- North America anticipates the most notable uptick, with ticket prices reaching $804 in 2024.
Hotel Rates
- The global average daily room rate climbed 3.9% to $158 in 2023, with different regions experiencing various rates of change.
- Further steady increases in both global and EMEA regions are expected.
Car Rentals
- Global car rental daily rates rose slightly, and similar moderate growth is projected for the ensuing years, maintaining a stable pricing environment across most analyzed regions.
Rethink Your Strategy for 2025
The CWT report advises a revamped approach in corporate and supplier interactions, changing the focus of the travel buyer. Here are the steps recommended for navigating the evolving landscape:
- Reenergize pricing strategies: Stay focused on costs, introduce competition, and consider bold moves with new suppliers if prices continue climbing.
- Holistic overview: Engage multiple stakeholders to grasp how business travel supports the organization.
- Adjust key performance indicators (KPIs): With price stability, shift focus to new KPIs, emphasizing travel programs as valuable for employee engagement.
- Continuous optimization: Embrace dynamic pricing powered by advancements in artificial intelligence and New Distribution Capability, necessitating ongoing negotiations.
- Diversified pricing strategies: Acknowledge the varied pace of economic growth across regions and its effect on travel costs.
- Explore new pricing approaches: As leisure markets soften, the traditional pricing power may decline, influencing how prices are set going forward.
Strategies outlined here provide a structured approach for businesses to navigate the fluctuating business travel market effectively.
By embracing innovation, organizations can better manage costs and enhance value. Meanwhile, your ability to make plans and initiate cross-department collaboration will enable your business to respond proactively to market shifts.
Implementing these strategies allows businesses to remain agile, optimizing their travel management and seizing potential advantages in a changing economic landscape.
Wrapping Up
In celebration of its tenth Global Business Travel Forecast edition, CWT and GBTA have also prepared a special supplement slated for release soon. This supplement will outline three potential future scenarios for business travel—Base, Boom, and Bust—extending to 2040.
Furthermore, it will explore how emerging megatrends such as technological innovations, demographic shifts, sustainability imperatives, and geopolitical changes will influence business travel’s evolution.
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