The business travel outlook for next year looks to be similarly subdued, with flat to moderate rate increases expected globally across air, hotel and ground transportation, according to Global Business Travel Forecast 2017 by American Express Global Business Travel.
The continued slowdown of the Chinese economy and depressed oil prices, the United Kingdom’s impending departure from the European Union, growing populist politics and increased security concerns in many countries have together created a higher level of uncertainty in the global marketplace.
Rodolfo Elizondo, vice president and head of global business consulting at American Express Global Business Travel (GBT), said: “Travel managers should focus on the things they can control, like demand management, compliance and traveller satisfaction to reduce risk and increase savings,” he said.
In Europe, airlines continue to face lacklustre economic performance, security concerns, long-haul pressure from Gulf carriers and the growing presence of low-cost carriers on short-haul routes.
With low-cost carriers looking to continue their expansion efforts in 2017, airfares will stay level with 2016. In the U.K., the currency devaluation following Britain’s decision to leave the European Union, aka Brexit, has had the short-term effect of making outbound travel from the U.K. more expensive.
However, the medium to long term impact of Brexit on business travel will not be known until the U.K. government starts negotiations with the EU, which are expected to begin in Q2.
Political and economic uncertainties in Europe are flattening hotel demand but the overall lack of new supply should help sustain mild rate increases. Despite speculation that the U.K. would see prices rise on higher demand from value-seeking tourists and domestic vacationers forced to stay at home, rates are staying level and should remain so through 2017. In European countries where demand growth is strong, such as in Ireland or Russia, price increases should be similarly robust.
Travellers renting cars in Europe are increasingly looking for options with a lower environmental impact, such as hybrid and electric vehicles. While suppliers are prepared to increase their fleets in this respect, they will only do so once the infrastructure to support it becomes available.
Rates should rise only marginally across all regions in Europe as economic growth is tempered by strong competition among car rental companies looking to expand their regional footprints.