Business Travel Costs Expected to Keep Climbing

business traveler

Global business travel and events costs are expected to keep climbing through the remainder of 2023 and into 2024.

However, lingering economic uncertainty and a gradual easing of supply-side constraints are likely to result in more subdued price increases than the record hikes during 2022, business travel and meeting specialist CWT and the Global Business Travel Association (GBTA) said in a Thursday (Aug. 10) press release.

Increased fuel prices, labor shortages and supply chain challenges, paired with consumer demand and corporate buyers having less leverage, have all caused the ticket prices of business travel to skyrocket, according to the release.

“Looking forward, prices seem to be leveling off with much milder increases projected over the next 12 to 18 months,” CWT President and CEO Patrick Andersen said in the release. “We could now be looking at the true new cost of travel.”

The price increases are also being driven by airlines taking longer than expected to get planes out of storage and back in the air, struggling to hire the numbers of cabin crew and pilots they need, and waiting for new planes to be manufactured, Bloomberg reported Thursday. At the same time, passenger traffic has returned to 94% of the pre-COVID level.

“Demand is outrunning capacity growth,” International Air Transport Association (IATA) Director General Willie Walsh said in the report.

Hospitality giant Marriott International reported Aug. 1 that it had strong second-quarter earnings, driven by the continued recovery in global lodging demand.

The global average ticket price (ATP) of flights booked for business travel rose at a record rate in 2022, increasing 72.2% year over year, according to the CWT and GBTA press release. By region, ATP rose 31.5% in the Europe, Middle East and Africa (EMEA) region, and jumped 148.7% in the Asia-Pacific (APAC) region.

The global average daily rate (ADR) for hotel bookings also rose, increasing 29.8% year over year in 2022, the release said. North America saw hotel ADRs rise 33.8%, while Latin America recorded a 26.9% increase.

The average daily cost for meetings and events, which was noted at $160 in 2022, is expected to rise to $169 in 2023 and $174 in 2024, per the release.

“As this research outlines, it’s clear that rising costs and pricing pressures will likely continue to be a significant factor in business travel for the foreseeable future,” GBTA President and CEO Suzanne Neufang said in the release. “And as we experienced over the past few years, we may also continue to see different pricing fluctuations across industry verticals, business sectors and global regions.”

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.