Meeting planners will not be surprised to hear that U.S. hotel and air rates are headed up again in 2015 (4.5 percent and 3 percent respectively). We’ve been reporting the reasons throughout 2014: record demand and little new supply among meeting hotels, and restricted capacity and increased consolidation among airlines.

Possibly the more surprising predictions from a recent joint forecast released by the GBTA Foundation (the education and research arm of the Global Business Travel Association) and Carlson Wagonlit Travel are the huge travel price increases for Latin America. The cost per attendee per day for meetings in the region will be up 8.5 percent in 2015, the report says, a result of airfares increasing 3.5 percent and hotel rates increasing 6.3 percent. And consider some of the hikes in individual countries: 11.5 percent in Argentina, 11 percent in Brazil, and 17.5 percent in Venezuela. (We should note that the other end of the spectrum is Mexico, where hotel rates are expected to remain flat.)

Also a surprise is that these increases make Europe look like a bargain in 2015, with its comparatively small 1 percent jumps in both airfare and hotel rates. (Exception: the U.K., where hotel rates could go 3.5 percent higher in 2015 due to lack of supply.)

What’s Scoot Got to Do With it?
An even more surprising value could be China, with minimal expected growth in airfare (0.8 percent) and hotel rates (0.1 percent). Low-cost carriers such as Scoot now represent 26 percent of capacity in the Asia-Pacific region, according to the report, which has a moderating effect on airfare. And within China, airlines also face competition from high-speed trains. Hotel rates, not surprisingly, are being held in check because of a glut of rooms in China. “The hotel pipeline remains full,” the report states, and it will be interesting “to watch how the supply/demand dynamics play out as development continues.”

Corporate Confidence and U.S. Meetings
For meetings in the U.S., the report states, “steadily improving economic conditions and resulting corporate confidence will contribute to modest increases in per-attendee spending and group size in 2015.” Another prediction: The concept of improving negotiating leverage with suppliers by combining meeting and transient spent will gain momentum among U.S. companies in 2015.

Generalizations about worldwide meetings from the report:
• Booking lead times continue to shrink
• Social technology use continues to rise
• Compliance is a concern shared across industries and countries

 

Crystal Balls Never Show All
Recognizing that forecasts by definition are uncertain, GBTA and CWT include in their report a list of factors that could affect travel pricing differently than predicted. These are:

The Ukranian crisis: If it escalates, the report states, it could affect the European and Russian economies and prompt a short-term spike in energy prices.
Deflation in Europe: If the declining European inflation results in prices that continue to fall, an expectation of further declines could lead businesses and consumers to delay spending.
Local debt in China: If the central government has to bail out local governments, critical infrastructure building would slow, the report says.
Oil: Ever-variable, if oil prices spike, it is like “adding another tax on consumer and business spending, translating into higher travel prices almost immediately,” according to the report.

Where the Numbers Came From
The projections in the 2015 Global Travel Price Outlook came from a statistical model created by a research firm, Rockport Analytics, plus the market-specific expertise of CWT personnel worldwide, along with macroeconomic information from a variety of sources, and data from the GBTA Travel Manager Sentiment survey, an online survey of corporate travel managers worldwide. (The survey was sent to 6,400 travel managers; 624 completed surveys were received.)