International companies are pulling back their spend on corporate travel, according to recent analysis. But the latest data from Advito finds the key to corporate travel spend increases.
According to the firm’s 2017 industry forecast report, outlined by Skift, cheaper airfare is the ticket to expanding business travel in the year ahead. Analysis predicts hotel fares to rise slightly, but airline prices to stay flat for 2017.
Emerging markets, in particular, will fuel some growth for the corporate travel space next year. “At 4.2 percent, growth will surpass the 3.5 percent forecast for 2016,” Advito analysts concluded. “This improvement is largely driven by Latin America, primarily due to Brazil, which is expected to emerge from a prolonged recession, but also because of stronger growth from Argentina and Colombia.”
Asia, too, is fueling emerging market growth in corporate travel, the report said. “It will expand, on aggregate, by 5.6 percent in 2017,” said Advito.
In the U.S., the strongest shifts in corporate travel trends land in the hotel sector. Advito forecasted that hotels will push corporates for a dynamic pricing structure and turn away from negotiated discounts.
“With negotiating options narrowing for corporate clients, we expect rates to rise in 2017 by 3–5 percent in the U.S., with smaller increases for hotels in Canada and Mexico,” the report said. But airfare is slated to remain suppressed thanks to competition between both major carriers and low-cost airlines.
In Europe, meanwhile, business travel budgets are expected to remain low thanks to uncertainty over Brexit. Budget airline growth and a lower hotel supply, analysts added, could keep corporate travel costs down, too.