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Mar 23, 2018,  by Allianz Partners Business Insights

Business travel: prices set to rise moderately in 2018

According to estimates recently published by American Express Global Business, prices are not set to rise significantly this year, thanks in no small part to increased capacities.

 

The price of business travel in 2018 is only set to go up slightly, if estimates by American Express Global Business Travel (GBT) are to be believed. Suppliers have been boosted by an upturn in the economy and are increasing their capacities and their competitivity in an attempt to win market share, according to Tourmag. The site advises caution however, due to geopolitical instability in certain areas that in certain cases is being combined with protectionist economic measures, bringing about a climate of uncertainty as far as business is concerned.

 

GBT 2018 estimates for air transport, hotels and car hire

 

According to 2018 estimates for business travel regarding air transport, increases in tariffs should be compensated for by lower petrol prices and low-cost providers battling for market share. Conventional airlines are now tending to have a far wider price range, with a growing number of seats at lower rates in order to compete with their budget competitors.

American Express Global Business Travel also predicts slight to moderate rises in hotel prices, due to the strengthening of regional economies and despite significant investments in new accommodation offers. Overall costs are set to rise, however, due to supplementary fees being applied and harsher cancellation policies from a large number of hotels, as they look to improve profitability.

With regard to car hire, after a long phase of stagnant or even negative growth, prices are set to rise thanks to better fleet management by the various companies and the pressure of operating costs being brought to bear on rates. The 2018 estimates also state that competition will remain high and car-hire companies will use additional services to improve their profitability, in the absence of a significant rise in rates.

 

Potential consequences of Brexit on transport in Europe

 

European transport could be affected by Brexit following potential changes in the activities of carriers and in passenger demand, even if British companies should theoretically be able to count on stable air travel prices. The operations of rail and air service providers covering this particular geographical area could be impacted by the redefining of air traffic access and border controls in 2019.

American Express Global Business Travel also said that outside of the UK and Spain, the rest of Europe can expect hotel prices to rise significantly. Hotels are apparently already registering increased demand driven by tourism, exceeding the limited increases in supply.

Demand is also up in the land transport sector, in particular for the car hire segment which is set to have increased slightly. The 2018 estimates believe that prices will remain relatively stable due to the strong competition among car-hire suppliers and Generation Y’s preference for public transport and car-pooling.

 

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