Business Road Warriors: Expect Your Travel to Be Even Pricier

Robust leisure demand, inflation and supply constraints will combine to boost prices for business travelers next year after a major surge in 2022 that has likely reset pricing for road warriors at a new level, according to a forecast.

Average business travel air fares will rise 2.3% in 2023 and 1.8% next year to $780, according to the 2024 Global Business Travel Forecast issued Thursday by CWT and the Global Business Travel Association (GBTA). Those increases come atop a 72% surge last year, when a wave of pent-up demand from leisure travelers washed across the global airline industry.

“Elevated costs look set to stay with us in the year ahead, but with muted increases going forward,” the report’s authors write. “This new era could reflect today’s true cost of business travel.”

Hotel prices will rise 3.6% to an average daily rate of $174, as strong average daily rates are no longer dictated by strong occupancy growth. “It is likely that non-demand related costs – including inflation, labor shortages, and energy costs — have been the primary force behind this pricing peak,” the report says.

Daily car rental rates are expected to rise 2.1% to $49 next year.

Amid the sustained leisure demand — especially among premium travelers —many corporate buyers are entering buying discussions with less negotiation leverage as their travel volumes remain below pre-pandemic levels, the report noted. Airline bookings for business travel remain about 25% below 2019. 

“Yet demand remains strong as corporations seek to drive global sales and build relationships in a post-Covid world,” the CWT-GBTA report said. “This strong demand coupled with inflationary pressures including higher interest rates and oil prices, have helped fuel price inflation for corporate trips as they compete for the same slots sold to leisure customers.”

Higher airfare pricing reflects a fundamental imbalance of overall demand with supply, the latter being constrained since the huge retrenchment in 2020. Airlines are now contending with too few pilots, late deliveries of new aircraft due to supply-chain glitches, and generally smaller fleets given the number of older aircraft they retired in the pandemic.

The report was based on data  from more than 70 million ticketed flights, over 125 million hotel bookings and more than 30 million car hires from 2018 to the present.