The outlook for international business travel is generally optimistic, according to the Global Business Travel Forecast 2018 published by American Express Global Business Travel (GBT).
Last year, demand for business travel started to rebound, and is expected to grow over the next 12 months, with notable gains expected in Europe and Asia. However, prices will see only marginal gains, as suppliers rapidly increase capacity to meet demand, according to the research.
Remarked Jo Sully, Vice President & General Manager, American Express Global Business Travel, Australia & New Zealand, "Modest increases in fares across air travel and hotel are expected across Asia-Pacific as a result of renewed business confidence within the region, driven largely by the influence of China and India.
"Despite positive economic conditions, companies continue to seek cost savings in travel, and we anticipate continued scrutiny in areas such as trip length, moving bookings online, hotel consolidation, and advanced bookings."
Air: While strong demand is expected to drive airfare increases across all regions, overcapacity on certain routes, aggressive expansion by low-cost carriers (LCCs), and low oil prices will keep them in check. Full-service carriers are increasingly unbundling fares and adding premium economy seating options to better compete with LCCs.
Hotel: Globally, hotel performance is expected to improve with small and moderate increases, despite robust investment in new supply. Total costs, however, should increase even further as additional ancillary fees and stricter cancellation policies are being applied by hotels looking to bolster profitability.
Ground: After years of flat or negative growth, rental car rates should finally see increases as companies improve their fleet management while operating costs put pressure on pricing. However, competition will remain fierce.
In Asia Pacific, China remains a key driver of the demand growth. Airfares will remain relatively stable compared to 2017, as political stability and strong demand in China and India, is counterbalanced by widespread overcapacity and flatter demand in Japan and Australia. Domestic carriers in China will also have to compete with the world's fast-developing high-speed rail network, which is expected to grow another 50% by 2020.
Hotel rates in the region will generally increase although this will vary considerably by country. South Korea is the only nation expected to see rate decreases, largely as a result of China's tourism ban.