As this is our first newsletter of 2014, we wanted to take the opportunity to give you an outlook at the business travel world this year. Therefore we have put together a quick guide helping you assess the impact of global events and economic conditions that are going to affect corporate travel prices in 2014.
World Economic Outlook
The world economy is expected to grow between 2.7 % (OECD) and 2.9 % (Oxford Economics, Nov 2013) in 2014. US economy is forecasted to grow by 2.5 % with rising employment. Asia continues to grow fast with a forecasted GDP growth of 4.3%, whereas in the Eurozone economic growth is still very slow, however a post growth of 0.6% is likely.UK growth is expected to accelerate to 2.4% in 2014 (Source: OECD) as opposed to its earlier forecasted 1.5% in 2014.
Air Fare Price Forecast
Air fare prices are expected to remain stable in mature markets; whereas air fares in emerging markets are likely to fall because of capacity increases. Due to the American Airlines/US Airways and Virgin/Delta merger price increases are likely in North America as a result of reduced competition. The growing demand for South America is likely to result in price increases, last but not least due to the FIFA World Cup in Brazil and carrier consolidation. With continuing growth of low cost carriers putting price pressures on legacy airlines and continuing economic uncertainty, air fares in Europe are likely to remain stable or slightly drop.
Hotel Price Forecast
In most regions modest increases in the “Average Daily Rate” (ADR) are likely as a result of steady demand and little new supply. However, due to economic growth UK ADR’s are likely to rise by +2-5% this is stronger than in the previous year. Globally, it is expected that hotels will aim to raise corporate rates by 4-5% for 2014. However, it is likely that hotels will achieve only 50% of this target in average. The World Cup in Brazil (+ 6-8%) will significantly affect hotel prices in this area. Double digit rate increases are likely in primary international business hubs, including the destinations New York and Hong Kong and undersupplied cities like SAO Paulo and Luanda.
Rail Fare Price Forecast
According to the Rail Delivery Group, the organisation that represents the train industry, UK rail fares will increase in average by 2.8% in 2014. Since the introduction of the new rail fares in January this year, our Rail-Line specialists took a closer look and compared 3 popular rail routes for business travel.
A Standard Anytime Ticket to London from Bristol went up from £187 (DEC 2013) to £193 ( JAN2014), which is an increase of 3.10% on 2013 fares.
A Standard Anytime Ticket to London from Birmingham went up from £158 (DEC 2013) to £164 (JAN 2014), which is an increase of 3.66% on 2013 fares.
A Standard Anytime Ticket to Bristol from Birmingham went up from £94 (DEC 2013) to £103 ( JAN 2014), which is an increase of 8.73% on 2013 fares.
However, high-speed rail travellers from London may also be looking forward to lower prices, as a result of two recent developments. The European Commission’s June 2013 ruling, that Eurotunnel is overcharging passengers and the Deutsche Bahn (DB) finally received an operating license to start services through the tunnel. The increased competion amongst european rail services, may help to drop european rail fare prices slightly. Internatioanlly, China’s investment in high-speed rail services has resumed, after it was on hold due to safety concerns.
Call Flight-Line today, and request a detailed travel price forecast tailored to your individual business travel patterns and needs.