There are fewer things in life that seem to increase so rapidly as the cost of flights, with 2018-2019 being a year of rising airfares. However, it appears that all that is set to change with prices set to slow down in 2020. This comes simultaneously with the slow down on hotel rates, which is great news for all nomads. Business travelers in particular need to stay up-to-date on this news. Continue reading about why airfares and hotel prices are expected to stabilize.
Why The Stabilization?
This is great news for travel advisors, business clients and the majority of people who enjoy a good getaway. However, the deeper factors behind this slowdown are looking less positive for a variety of reasons. Of course, there is the impending Brexit deadline which continues to wreak havoc with people’s stability and ability to predict the future of the UK economy. Then, there are other risks and uncertainties including escalating trade wars, and the possible disruptions to the oil supply. These risks are only increasing the general fears of a semi-global economic slowdown.
What Does “Semi-Global” Mean?
Before we get too bogged-down with this gloomy outlook for the economy, the outlook varies according to each region of the world. This is crucial for corporate travel managers to take note of. That way, they can plan properly. Certain areas of the globe are expected to continue growing their economy through a potential downturn.
In Western Europe, airfares and hotel rates will barely shift from the levels in 2019, with increases of 0.5% and 0.7% respectively. These increases are predicted to be much greater in other areas such as North America. Air and hotel fares are expected to rise by 2.3%.
In Asia, a fast changing and evolving area of the world, air and hotel rates are predicted to rise approximately 1.3% due to a steep increase in the supply of accommodation. An example of this is in Japan with many hotels opening in advance of the 2020 Olympic Games. Flights will also be in higher demand during this period of time with the tourist industry currently booming not only due to the games, but the increasing perception of travelers looking to explore greater cultural areas.
Will Airfares And Hotel Rates Decrease?
Whilst it is unlikely that airfares and hotel rates will decrease in the majority of regions of the world, the same cannot be said for Latin America where we may be seeing an actual slight decline in air and hotel prices.
What Else Will Change?
Of course, these are only predictions. Much of what happens is driven by business travel demands. In turn, these events will be affected by a variety of other trends, including overheated markets cooling and Airlines needing to reply on alternative means to increase their revenue.
What About Overheated Markets?
What do we mean by overheated markets? Well, have you ever looked at prices for flights to places such as New York or San Francisco? If you haven’t, business travel markets saw dramatic price hikes in areas such as these. In fact, many travelers were not able to afford to stay there (that’s if they could even afford to get there in the first place!).
Now, thankfully, we are seeing these prices coming back down to Earth. The are much more affordable again for the standard business traveler. Travel agents need to stay updated on this information to assist business travelers in keeping their costs low. What is typical following a price hike is that rates decrease or plateau as travelers are forced to search out accommodation further afield.
Will Flight Prices Drop?
Unfortunately, probably not. Airlines will still remain to seek out a profit in any way they can, and if this is not through airfares, it will instead be through the use of increasing NDC and any ancillary fees that can be added onto the cost of the fares in order to keep their profits flowing. Although we may not be seeing any significant price falls in the upcoming year, prices are set to stabilize, continuing to make travel an option for most looking to travel a little further afield.