The cost of global business trips and events will continue rising

Attendees of global business trips and events are expected to continue paying more money in the coming years as the cost of travel continues to rise within the business sector. These business-related travel expenses are set to rise slightly for the rest of 2023 and into 2024 as well, but not as much as the increase which occurred in 2022, with costs now easing slightly.

The findings of this rise in the cost of global business trips and events come from the 2024 Global Business Travel Forecast, recently released by global business travel and meetings specialist, CWT, together with the world-renown business travel trade company, Global Business Travel Association (GBTA).

The areas in the forecast taken into consideration to get an understanding of what travel prices business attendees are impacted by included flight prices, hotel rates, car rentals plus meeting and events costs. The categories in the report were listed as 'Air', 'Hotel', 'Ground transportation' and 'Meetings & Events'.

What caused travel prices to surge massively in 2022 was increased fuel costs, labour shortages and issues with supply chains. Price increases are estimated to not skyrocket as much over the coming 12-18 months due to the unpredictability of the economy coupled with supply-side constraints being moderately eased.

In the 'Air' category, the average ticket price (ATP) went up massively in 2022 to £588, which was an increase of 72.2 per cent from the previous year. Looking at the rest of 2023, forecasts show there is set to be a year-over-year (YoY) increase of 2.3 per cent, with an ATP of £602, whilst there is expected to be a 1.8 per cent rise from that figure in 2024, with ATP projections of £613.

The region with the highest ATP recorded in 2022 was Europe, the Middle East and Africa (EMEA), at £671, which was a YoY increase of 31.5 per cent. The level of price increases in the region is expected to drop significantly with a 2.9 per cent rise projected in 2023 and 2.2 per cent in 2024.

Despite this, Asia Pacific with an ATP of £445, was the region with the largest ATP increase for 2022 at an astonishing 148.7 per cent. This increase in the Asia Pacific region came notably from major business destinations such as Japan and Australia opening up their borders to travellers that were vaccinated and allowed visa exemptions to resume, causing average airfare increases to both nations of above 75 per cent.

With China's airlines and others within the region returning to previous availability, there will be more global route capacity, meaning the stronger supply may be able to slow down the price surges from 2022. This is as ATP's in the region is estimated to go up 4.8 per cent this year and lesser next year with a 2.7 per cent spike.

For the 'Hotel' sector, there was a 29.8 per cent YoY increase to £126 in 2022 for the average daily rate (ADR) of hotels. Part of this increase in 2022 saw cities such as London, Singapore and Miami having high record-setting ADR figures for that year.

With the construction of hotels still below pre-COVID-19 levels, supply constraints have occurred, which means current hotels have less competition and maintain price leverage, but ADRs are gradually decreasing. ADRs are estimated to rise by 4.3 per cent for 2023 at £132 whilst the rates will then be projected to climb less at 3.6 per cent next year with a slight ADR increase to £136.

In 2022, the region with the largest growth for ADRs for hotels was North America, with a YoY climb of 33.8 per cent up to £136. The ADRs in North America are estimated to rise by four per cent to £142 for the rest of 2023 before going up just 3.3 per cent to £146 in 2024.

ADRs across Latin America increased by 26.9 per cent in 2022, partly due to many of the region's nations dealing with double-digit inflation. Now with inflation apparently having peaked, ADRs are forecasted to rise in the region by 9.1 per cent this year and lesser by 5.6 per cent next year.

Regarding 'Ground transportation', the daily rental rate of car journeys increased YoY by 9.8 per cent to £35 in 2022 and the forecast predicts that a 6.7 per cent rise will occur in 2023 at a cost of £37, hinting there will not be a substantial drop and still a notable increase in rate. However, the daily rental car rate is expected to reduce quite significantly with just a 2.1 per cent increase to £38 in 2024.

What led to the 'Ground transportation' category results were from businesses offloading vehicles during the COVID-19 pandemic as there was less need for them. Businesses were then unable to initially bring in new vehicles at a fast rate once the pandemic eased as there was a global shortage of vehicle semiconductors, causing vehicle prices to increase and ultimately the supply of car rentals becoming restricted.

With the 'Meetings and Events' category, the average daily cost per attendee grew largely in 2022 with a 58.1 per cent increase up to £126, due to more in-person meetings and events post-COVID-19. Businesses were eager to move on from the limitations of the pandemic when it came to meetings and events as conversing with potential new clients and forging relationships was difficult and inconvenient to do virtually.

Also, companies are planning more trips for their employees as a way of motivating and rewarding them and this trend of more frequent trips is expected to continue. The average daily cost per attendee is estimated to move up 5.6 per cent from 2022's figure of £125 to £133 in 2023 and then by three per cent to £137 next year.

Chief Executive Officer of CWT, Patrick Andersen, touched on the massive price increases for 2022 and what is expected in the years ahead.

He explained: "A potent combination of demand and supply-side pressures propelled travel prices higher than expected last year. Looking forward, prices seem to be levelling off with much milder increases projected over the next 12 to 18 months. We could now be looking at the true new cost of travel."

Chief Executive Officer of GBTA, Suzanne Neufang, hinted that business attendees will still have to deal with increased travel costs for some time, stating: "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."