Survey looks at average prices for air tickets, hotels and car rentals as part of 'true new cost of travel'
Employers will have to shell out more cash as the cost of business travel continues to grow, according to a recent report.
Rising fuel prices, labour shortages and supply chain challenges, coupled with red hot demand, caused travel prices to skyrocket in 2022.
But lingering economic uncertainty and a gradual easing of supply-side constraints are expected to result in more subdued price increases over the next 12-18 months, according to CWT and the Global Business Travel Association (GBTA).
Business travel will “never return to normal,” according to a previous report.
How much does the average business travel cost?
Year-over-year, the average air ticket price (ATP) is projected to go up to US$766 in 2023 (+2.3% YoY) and to US$780 in 2024 (+1.8% YoY), from US$749 in 2022. In 2022, it jumped a whopping 72.2% YoY.
The ATP in Asia Pacific climbed 148.7% YoY in 2022 to $567 – the biggest increase seen in any region, despite a lack of international travel demand from China, according to the report, according to the report based on data from more than 70 million ticketed flights, over 125 million hotel room night bookings and more than 30 million car hires covering data from 2018 to the present.
"A potent combination of demand and supply-side pressures propelled travel prices higher than expected last year," says Patrick Andersen, CWT's CEO.
"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. Our focus remains on helping our customers find the right strategies and solutions to get the most out of their travel budgets, meet their ESG commitments, and maximize the ROI on their travel spend."
Meanwhile, the global average daily rate (ADR) for hotel bookings is projected to rise to US$168 in 2023 (+4.3% YoY) and to US$174 in 2024 (+3.6% YoY) from US$161 in 2022. The ADR jumped 29.8% last year.
North America saw the highest growth in hotel ADRs of any region in 2022, rising 33.8% YoY to $174.
The daily rental rate for cars increased 9.8% YoY to US$45 in 2022. This will slow down to an increase of 6.7% YoY in 2023 to $48, and of 2.1% YoY in 2024 to US$49.
Meanwhile, the average cost-per-attendee per day for meetings and events will increase by 5.6% YoY (to US$169) in 2023 and by 3.0% YoY (to US$174) after a 58.1% YoY increase in 2022 (to US$160).
Corporate travel spending in the United States and Europe is expected to make a full recovery in late 2024, according to a previous report.
How employers can adapt to changes to business travel
Given the challenges facing the business travel industry in 2023, employers will need to be creative and innovative to succeed, according to John Lee, who has over 10 years of experience in business development and account management across various industries. He shares the following recommendations via LinkedIn:
- Adopt sustainable travel policies and practices to reduce carbon footprint.
- Use technology to manage travel arrangements more efficiently.
- Collaborate with hotels, airlines and other travel suppliers to negotiate better rates and find innovative solutions to manage the cost of travel.
- Prioritize the health and safety of their employees when traveling.
“Corporate companies, hotels, and airlines can succeed by adopting sustainable travel policies, using technology to manage travel arrangements, offering flexible working arrangements, collaborating with travel suppliers, prioritizing health and safety, creating unique travel experiences, and embracing technology and innovation,” says Lee.
“While the challenges facing the business travel industry in 2023 are significant, they also present an opportunity for companies to differentiate themselves and provide value to business travelers. By adapting to the changing landscape of business travel, companies can succeed and thrive in 2023 and beyond.”