Amex travel forecast sees decline in North American airfares

Amex travel forecast sees decline in North American airfaresNEW YORK — American Express Global Business Travel’s 10th annual Business Travel Forecast sees business travel costs that are less likely to be impacted by global economic trends and more likely to change due to changes from suppliers in reaction to corporate travel spending habits and country-specific economic activity.

For example, evolving airline network dynamics across all regions including more low cost carrier options, pending consolidation in the U.S. and stricter corporate policies towards short haul class due to stricter corporate policies are combining to have a direct effect on airline costs in multiple regions.

Overall, North American airfares are expected to decline in 2014 with the exception of short haul economy and long-haul business fares, due to heightened low cost carrier competition, challenging unemployment levels and corporate travel policies becoming more stringent in regards to business class travel. The expected adjustment of premium travel policies is the likely one of the reasons for the higher predicted declines in short haul business class airfares.

In Europe, because of more competition from a strengthening rail industry, larger airlines are being forced to follow the model of small low cost carriers.

Airlines in the United Arab Emirates, which has maintained steady economic growth, are expected to add capacity and new global destinations, likely causing short and long haul fare predictions to decline.

In APAC, China remains the driving economic force for the region and growth, driving will likely see higher rate increases, compared with North America and Europe.

In the hotel category lack of new hotel construction and oversupply in specific geographies will impact supply and subsequently price changes.

In the U.S., increased hotel construction is expected to drive competition as capacity is added, it could impact the ability for hotels to raise rates, although it may take some time.

Latin America’s larger local economies, like Brazil and Chile, are expected to drive some of the greatest increases across the regions for hotel rates in 2014.

Driven by expectations for increases in nearly all countries and all categories, the overall predictions for the EMEA region are for increases in both the mid- and upper range categories.

Hotel rates across the APAC region will likely see rate increases, as the region continues to grow economically and supply is not expected to outstrip demand in most locations.