Market Overview

Buoyant Global Economy Means Higher Hotel and Air Prices in 2019

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Travel prices are expected to rise sharply in 2019, with hotels going up
3.7%, and flights 2.6%, driven by a growing global economy and rising
oil prices, according to the fifth annual Global Travel Forecast,
published today by GBTA and CWT with the support of the Carlson Family
Foundation.

"While most major markets appear to be trending in the right direction,
downside risks remain for the global economy given the rise of
protectionist policies, the risk of stoking trade wars and Brexit
uncertainty," said Michael W. McCormick, GBTA executive director and
COO. "This forecast provides travel buyers with a better understanding
of the global market and key price drivers demonstrating the key to
building successful travel programs will be watching and reacting to an
ever-changing global landscape."

"Prices are expected to spike in many global markets even as inflation
remains subdued," said Kurt Ekert, President and CEO, Carlson Wagonlit
Travel. "The report explores the causes and includes an overview of what
we expect to see in key markets worldwide. It also gives specific
recommendations, giving travel managers ammunition for their upcoming
negotiations."

Released today by the Global Business Travel Association, the voice of
the global business travel industry, and CWT, the global travel
management company, the 2019 forecast also shows the trends and
developments that will shape the business travel industry.

"The future of corporate travel can be summed up as accelerated
personalization – with mobile technology, AI, machine learning and
predictive analytics all playing their part," said Ekert. "Success is
tied to technology, with sophisticated data-crunching at the very heart
of it."

*NOTE: Please tune in on Tuesday, July 24 at 9 am ET as GBTA and
Carlson Wagonlit Travel will be sharing the findings of a new report
through
Facebook
Live
in an interactive webcast.*

2019 Air Projections

The aviation sector will be shaped by the introduction of
ultra-long-haul flights and an increasing competition from the low-cost
carriers, which are not only multiplying but also fighting for long-haul
routes – and by the airlines' push towards NDC.

Airfares are likely to become more expensive due to rising oil prices,
the competitive pressure from the shortage of pilots, potential trade
wars and increasing fare segmentation to improve yield.

  • Asia Pacific expects to see a 3.2% rise in 2019 pricing. Chinese
    demand remains high and by 2020 the country is expected to become the
    world's biggest air travel market. In 2019, the country's flights are
    seen going up 3.9%, but China will not be alone. The vast majority of
    countries in the region will see price increases, especially in
    markets like New Zealand (7.5%) and India (7.3%). The latter is
    expected to be the world's largest aviation market by 2025, with
    airports operating beyond capacity. The only exception in this booming
    region is Japan. Prices there will likely drop 3.9% due to the
    country's added capacity in preparation for the Olympic Games in 2020.
  • Across Europe, Middle East & Africa, air travel is anticipated to
    continue growing in Western Europe, with prices rising 4.8%. The
    increase will be especially pronounced in Norway (11.5%), followed by
    Germany (7.3%), France (6.9%) and Spain (6.7%). Eastern Europe and the
    Middle East & African countries, on the other hand, will experience a
    decline of 2.3% and 2% respectively.
  • Prices across Latin America are expected to drop 2% in 2019. However,
    México and Colombia will see slight increases at 0.1% and 1.2%
    respectively– while Chile will experience a rise of 7.5%.
  • North America will see prices rise by a modest 1.8%, according to our
    projections. In the United States, airlines are recalibrating to
    reflect better areas of demand, depending on how trade relationships
    change with key U.S. allies and adversaries. The U.S. aviation market
    is expected to see capacity compression due to expanded fare
    fragmentation, with premium economy and basic economy reducing
    available seats, as carriers target margin improvement.

2019 Hotel Projections

The hotel outlook for 2019 is driven by the overall increase in air
travel, which will fuel demand for rooms. Technology will also play an
important part. Hotels are introducing new developments to personalize
the guest experience. The increase of mobile penetration, on the other
hand, is forcing travel managers to offer their travelers apps, which
also serve to accommodate greater in-policy booking autonomy.

Further mergers – and upscale hotels competing with midscale ones due in
part to a growing appetite for boutique accommodation among younger
travelers – will also be on the agenda.

  • In Asia Pacific, hotel prices are likely to rise 5.1% –with a large
    discrepancy as Japanese prices are expected to fall 3.2%, but New
    Zealand is set to rise a whopping 11.8%. In Australia, 2019 and 2020
    are expected to bring the largest number of new rooms becoming
    available, with an increase of 3.4% of total supply each year. In
    Indonesia, Swiss-Belhotel International is embarking on an expansion
    of its budget brand, Zest Hotels, with plans to triple its portfolio
    of properties within three years. Singapore is embracing technology
    and smart hotels are on the rise. In Thailand, optimism is running
    especially high after a period of political tumult.
  • Mirroring air prices, hotel rates across Europe, Middle East & Africa
    are expected to rise in Western Europe by 5.6%, while declining 1.9%
    in Eastern Europe and 1.5% in the Middle East & Africa. Again, Norway
    will lead with a rise of 11.8%, followed by Spain at 8.5%, which is
    expected to replace the United States as the world's second most
    popular destination, Finland at 7.1% and France and Germany each at
    6.8%.
  • Within Latin America, hotel prices are expected to fall 1.3%, with
    declines in Argentina (down 3.5%), Venezuela (down 3.4%), Brazil (down
    1.9%) and Colombia (down 0.7%). However, Chile, Peru and Mexico are
    expected to see 6.4%, 2.1%, and 0.6% increases, respectively.
  • In North America, hotel prices will go up 2.1% with 5% increases in
    Canada and 2.7% in the US.

2019 Ground Transportation Projections

Next year, ground transportation pricing is expected to rise only 0.6%
globally. However, by the fourth quarter of 2019, we will see a
concerted effort by rental companies to raise prices.

2019 will also see a growing preference among travelers for ride-hailing
apps while interest in high-speed trains is fading, due to high network
costs and low-tech distribution systems.

Mobile mobility will rise. On-demand, shared, electric and connected
cars will all become more popular. Connected car technology has the
potential to change the entire automotive industry.

  • In Asia Pacific, markets like New Zealand (4%), India (2.7%) and
    Australia (2.4%) will see increases. In China, giant Didi Chuxing is
    making big bets on autonomous driving. This year, Uber has sold its
    Southeast Asian business to Singapore-based Grab and Indonesian Go-Jek
    is expanding to Vietnam, Thailand, Philippines and Singapore.
  • In Europe, Middle East & Africa, countries like Finland, France,
    Germany, Italy and Spain will see increases of over 4%, while Denmark
    and UK rates will grow 3% and 2% respectively. Norway will be in pole
    position with a 10% increase. On the downside, prices will drop
    dramatically in Sweden (13.9% down) and very slightly in Belgium (0.9%
    down).
  • Prices in Latin America will show strong decreases in Argentina (9.7%
    down) and Brazil (5.4% down) and a more moderated one in Mexico
    (0.3%). Chilean prices will be up 3.1%.
  • In North America, Canada is expected to see a 3.6% increase in 2019,
    and the United States a 1.0% increase. In the U.S., the Audi-owned,
    app-based car rental service, Silvercar, continues its aggressive
    expansion. The company offers mobile-first car rental without the
    lines and paperwork.

For more detailed information, download the 2019
Global Travel Forecast
now.

About
the 2019 Forecast

The projections in the 2019 Global Travel Price Forecast are based on:

  • A statistical model, developed by GBTA with market and economic
    research firm, Rockport Analytics, that evaluates historical price
    behavior and forecasts future price references.
  • The market-specific expertise and travel industry knowledge of CWT and
    CWT Solutions Group personnel worldwide.
  • Information sourced from Moody's Analytics, the International Monetary
    Fund Research Department, the United Nations and other leading
    organizations.

Projections are based on transaction data from CWT's global client
portfolio, including anonymized client travel patterns, over the past
seven years. Key macroeconomic and per-country indicators, such as
current and expected GDP growth, the consumer price index, unemployment
rates and crude oil prices, were used in the statistical model, as well
as key supply-side drivers sourced from OAG and STR Global. All air
statistics represent point of origin and include all trip types.

About the Global Business Travel Association

The Global Business Travel Association (GBTA) is the world's premier
business travel and meetings trade organization headquartered in the
Washington, D.C. area with operations on six continents. GBTA's
9,000-plus members manage more than $345 billion of global business
travel and meetings expenditures annually. GBTA delivers world-class
education, events, research, advocacy and media to a growing global
network of more than 28,000 travel professionals and 125,000 active
contacts. To learn how business travel drives lasting business growth,
visit www.gbta.org.

About
Carlson Wagonlit Travel

Companies and governments rely on us to keep their people connected. We
provide their travelers with a consumer-grade travel experience,
combining innovative technology with our vast experience. Every day, we
look after enough travelers to fill more than 260 Boeing 787s and
100,000 hotel rooms - and handle 105 events. We operate in around 150
countries, and in 2017 posted a total transaction volume of more than
US$ 23 billion.

Please follow us on Twitter,
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and LinkedIn.

About the Carlson Family Foundation

This forecast is made possible by the Carlson Family Foundation.
Established in 1950, by its founder, Curtis L. Carlson, the Carlson
Family Foundation represents the commitment of the Carlson family to
give charitably to humanitarian and community affairs. Through
investments in education, mentoring, children and youth at risk, youth
mentoring, anti-trafficking initiatives, and workforce development
programs, the Carlson Family Foundation actively participates in
creating strong and healthy communities, and a competitive workforce.

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