Corporate travel prices to continue rising in the coming year
After a year of sharp increases in rates in the various segments that make up the Business Travel, the next year is presented with a similar trend, although more moderate. This is the prediction of the experts gathered by Forum Business Travel in two conferences held in Madrid and Barcelona. One of the factors behind this increase is demand, which continues to be higher than supply.
Economic uncertainty, an adverse geopolitical situation and a supply that is not able to meet all the demand continue to heat up corporate travel prices. The trend will continue through 2024, although experts believe that the biggest increase has already occurred, to above pre-pandemic levels.
As explained by Óscar García, co-founding partner of Forum Business Travel, at the two monographic conferences held on November 7 and 16 in Barcelona and Madrid, respectively, “the big question is whatá the real cost of travel will be and whether the increase is here to stay”.
RATES AÉREAS
By segment, in the aéreo; an additional 2.3% price increase over the initial forecast for 2023 and 1.8% for 2024 is expected. Once again, seat supply is lagging behind demand, which continues to generate upward pressure.
According to Marta Ortiz, Sales Representative in Cataluña of Air China, “next year there will be increases, but more moderate, because since the pandemic the cost of the year has already increased by 40%”.
Fernando Álvarez, Corporate Sales Manager Spain at Air France – KLM, points out that the variables that will influence airfares are “the lack of seats, the greater control of airlines over prices, inflated prices, and the lack of capacity;
The lack of seats, increased airline control over fares, rising inflation around the world, swings in fuel costs and the strength of holiday traffic, all of which influence higher fares.
HOTELS AND CARS
In terms of accommodation, hotels in the EMEA region are coming off a sharp rise in 2022, close to 30% compared with the previous year. Some cities are reaching historic levels, such as Miami, London or Singapore. Even so, the average occupancy rate remains very high, an indicator for further rate increases.
In view of this situation Max Siñeriz, Regional Sales Manager – Cataluña of NH Hotel Group, recommends companies to value other factors, “as the level of service, security, technologyía, professionalism or worldwide coverage provided by the hotel chains”.
With regard to car rental, the year 2023 could end with an increase of 6.7%, after the rate reached in 2022, to reach a 9.8% increase worldwide. In the EMEA region it was even higher, at 10.9%.
According to Vicky Ibarzo, Corporate Sales Manager at Sixt Rent-a-Car, “operator costs have shot up 30% in just two yearsños and we continue to have problems acquiring fleet”. The forecast points to more moderate rises during 2024, around 1.6%.
AVERAGE TICKET
As noted by Raúl Sánchez, Country Manager of Diners Club Spain, at the Forum Business Travel conference, the average ticket for a business trip rose 9% in 2023, 6% in 2022 and will continue to do so next year. On top of that, the cost of financing for companies has grown by no less than 277% since 2021 and 49% since 2022.
In these circumstances, payment methods are considering charging for certain added services that until now have been incorporated free of charge to credit cards, such as travel insurance. “We are living a new paradigm; we have to find a balance if we do not want to disappear, because our income has decreased, due among other things to the reduction of discount rates, and yet expenses have increased”, explainedó Sá Sánchez.
TRAVEL WITH RETURN
This whole scenario is having an effect on the travel policy of companies, which are increasingly weighing the timeliness and return on investment of their employees' travel. Sustainability objectives are also reducing in some cases the authorizations to those that are truly essential. Other companies are opting to reduce their duration or limit the number of people traveling.
The demand for travel and the holding of meetings and congresses is already particularly high not only in Madrid or Barcelona, but also in Valencia, Bilbao, Málaga, Seville or Mallorca. In these cities, big events are expected next year, as Samuel Ruete, Business Development Manager Eastern Spain at Meli Hotels International, commented, with an upward effect on prices.
In his opinion, the key for companies to save money is to concentrate the purchase of nights in a limited number of suppliers to negotiate by volume. He also advises booking as far in advance as possible to get better deals. Helena Caparroso, from the Sales & Marketing department of Apartool, notes that the increase in nightly rates is higher than the monthly cost of corporate apartments, so many companies are opting for this type of accommodation.
Perhaps one of the few sectors where rates have been contained is in high-speed rail, due to competition from new operators, such as Ouigo and Iryo. The latter, more oriented to business travel, will launch in December a new Barcelona-Seville route with stops in Zaragoza, Madrid and Córdoba. The former Renfe monopoly has also reacted with a low-cost product through the Avlo brand.