UK air and hotel rates will rise in 2015 says American Express

UK air and hotel rates will rise in 2015 says American Express

UK set to be bright spot in Europe due to economic recovery, with strong financials and continued growth expected

The American Express Global Business Travel Forecast 2015 has forecasted that air rates will re-bound – specifically for long haul rates – in the United Kingdom during 2015, in line with the economic recovery, while hotel rates are expected to moderately increase.

Despite low economic growth across Europe, the report states that the UK is a bright spot, with strong country-level financials and expectations for continued growth next year. However, as the UK economy stabilises, the cost of corporate travel may also rebound.

The Forecast predicts that airline capacity in the UK will remain constrained as airlines manage inventory as closely as possible, which will continue to drive up prices.

Larger airlines are scheduling international travel from the north through Heathrow more intelligently, allowing for more efficient international trips, such as Manchester to Shanghai and Scotland to South Africa.

Airlines expect that growth in long-haul travel will be a result of optimising route timings, price and aircraft type. Short-haul prices are expected to remain stable or decrease slightly, as a result of low-cost carriers keeping demand in check by maintaining current capacity levels.

Hotel rates across the UK are expected to rise, with the strongest increases expected in London, fol-lowed by Edinburgh, Leeds and Cardiff. These locations are expected to become stronger and more consistent, with steady demand and new properties being built, particularly in the south of London.

“UK hotel rates continue to rise whilst London has been maintaining its rates after hosting a number of international events along with Queen Elizabeth’s Diamond Jubilee in recent years. However, many corporations have cut back on spending and hotels may not get the prices they are setting. Nevertheless, the economic recovery in the UK is a welcome boost to the business travel industry,” said Caroline Strachan, Vice President, Global Business Consulting, EMEA, American Express Global Business Travel.

Highlights from the report:

Air Travel

In 2015, European air prices will likely remain neutral, with the exception of added capacity on transatlantic routes, which may lead to lower fares in that category.

As corporations impose stricter travel policies, short-haul business air travel demand appears to be declining slightly, leading some carriers to reduce available capacity for this segment.
An increased presence from Gulf carriers will likely keep long-haul rates very competitive, however supply will continue to have a slight effect on the market, as airlines elect to refit or replace existing aircraft to accommodate changes in demand.

Outside Europe, capacity increases will likely cause prices to drop for short-haul business and long-haul economy airfares in the Middle East and Africa.

Hotels

Hotel rates are predicted to rise slightly in nearly all countries and categories across EMEA, as de-mand steadies.

In 2015, a number of European cities are expected to add higher hotel-related taxes for travellers, making it more difficult for companies to accurately determine hotel pricing in advance.

Smaller corporations, with less negotiation leverage than their larger counterparts, are particularly likely to face increased hotel prices. The growing number of cities in Europe adding or increasing hotel-related taxes will also lead to both rising prices and greater uncertainty in planning corporate travel budgets.
In the Middle East and Africa, the impact of economic uncertainty and political challenges means hotel price predictions vary greatly from country to country.

The three key drivers of this uncertainty are conflict, disease and natural resource development, such as oil, gas and mineral finds. In the safest regions of the Middle East and Africa, such as the United Arab Emirates, hotel occupancy rates and prices are rising.

For details on how to purchase the Forecast, which includes many more country-specific insights on airfares, hotel and car rental rates in regions throughout the world, please contact GlobalBusinessConsulting@aexp.com