Internet Travel Monitor - Travel Industry News

March 21, 2018

BCD Travel Industry Forecast Predicts a 1% Rise in Airfares, and Hotel Rate Increases of 2-4%
Airfare prices are slowly climbing in markets with the strongest demand, according to BCD Travel's midyear update to the 2018 Industry Forecast. Meanwhile, the outlook for global hotel rates in 2018 remains unchanged with a 2-4% increase predicted over last year.

BCD's airfare forecasts have increased in a number of markets compared to predictions when the 2018 Industry Forecast was originally issued in September 2017. As the economic outlook improves, strong global air travel demand and rising oil prices are helping to push up fares. In response to supply constraint and increasing demand, BCD raised its oil price assumption from US$50 per barrel to US$60.

"Our initial forecasts for 2018 remain largely on target. Intercontinental economy airfares will increase slightly more than our original forecast as the global economy continues to strengthen," says Charuta Fadnis, BCD Travel's senior director of research and analytics.

The forecast reviews airfares in seven major regions for regional and intercontinental flights in business and economy classes, as well as projections for average daily hotel rates and economic growth assumptions. Midyear adjustments to the forecast with details by market are available in the full update. Previously published by Advito, BCD's consulting group, the forecast is now being produced by BCD Travel's Research & Intelligence team.

The BCD Travel 2018 Industry Forecast update also takes a closer look at some emerging trends of interest to travel managers, including:

  • The impact of surcharges resulting from airlines' efforts to lower their distribution costs
  • The benefits of integrating travel and expense management, and the options for extending this to other activities in an end-to-end solution.

Disrupting Airline Distribution
Airlines are eager to lower distribution costs and develop better ways of marketing their offerings across their own sales channels. Some major European-based airline groups, such as Lufthansa Group and two IAG airlines (British Airways and Iberia), have started to levy surcharges for tickets bought through non-direct channels. Air France-KLM will follow suit soon. This has led to increased costs for customers buying tickets through third-party channels, like global distribution systems (GDS). The report further explores the implications and impact of this development.

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