Corporate travel prices to continue rising in the coming year
Forum Business Travel analyzed industry trends in two meetings, in Madrid and Barcelona, with experts from different segments, who agree that, after a year of sharp price increases in the various segments that make up the Business Travel, the next year is presented with a similar trend, although more moderate.
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.
FBT Barcelona - PricingAs 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 what the real cost of travel will be and whether the increase is here to stay».
RATES AÉREAS
By segment, an additional 2.3% price increase over the initial forecast for 2023 and 1.8% for 2024 is expected in the yearéeacute;eacute;eacute;eacute;eacute;eacute;eacute; price increases of 2.3% over the initial forecast for 2023 and 1.8% for 2024. Once again, seat supply is lagging behind demand, which continues to generate upward pressure.
According to Marta Ortiz, Sales Representative in Cataluña of AirChina, «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, the inflated prices, and the lack of capacity;The airline's control over fares, rising inflation around the world, fluctuations in fuel costs and the strength of holiday traffic, which is driving up 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 and Singapore. Still, the average occupancy rate remains very high, an indicator for further rate increases.
In view of this situation, Max Siñeriz, Regional Sales Manager – Cataluña at NH Hotel Group, recommends companies to value other factors, « such 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 years and we continue to have problems acquiring fleet. The forecast points to more moderate rises during 2024, around 1.6%.
AVERAGE TICKET
As pointed out 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 employee 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 and Barcelona, but also in Valencia, Bilbao, Málaga, Seville and Mallorca. In these cities, major 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 in order to negotiate by volume. He also advises booking as far in advance as possible to obtain better conditions. Helena Caparroso, from Apartool's Sales & Marketing department, 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 high-speed rail, due to competition from new entrants 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.