Travelers can expect to start paying more for their vacations next year. So says Carlson Wagonlit Travel in its annual Global Travel Forecast.
A strong global economy is boosting prices in air, hotel and ground transportation due to higher oil prices and rising inflation. The increase will not be a small one, either. Forecasters predict that prices will increase as much as 4 percent in some sectors during the coming year.
"The higher pricing is a reflection of the stronger economy and growing demand," said Kurt Ekert, president and CEO, Carlson Wagonlit Travel.
"The global numbers from this forecast should be considered strong leading indicators of what 2018 will mean for global businesses, as we anticipate higher spending," Ekert added.
The 2018 Global Travel Forecast, compiled by Carlson Wagonlit Travel and the GBTA Foundation-the education and research arm of the Global Business Travel Association-noted that air travel could increase 3.5 percent and hotel prices 3.7 percent. Ground transportation was only forecast to increase by 1.6 percent, which is less than the price of inflation-3 percent.
The economy isn't the only thing that the travel industry needs to monitor, however.
"Geopolitical risks, uncertainties in emerging markets and ever-changing political environments in Europe and the United States mean today's travel professionals have more than ever to take into account when building their travel programs," said Jeanne Liu, GBTA Foundation vice president of research.
"The most successful programs will have to keep a watchful eye on both geopolitical risks and a rapidly-changing supplier landscape as they re-evaluate strategy often and adapt as necessary," added Liu.
Driving the increase in air prices is a rise in the price of crude oil and increased segmentation of basic fares, even though there is more capacity coming in 2018.
The increases, however, won't be equal across the board.
Asia Pacific will see an airfare rise of 2.8 percent, according to the survey. Air travel is expected to increase 5.5 percent in Western Europe and 8.5 percent in Eastern Europe. The Middle East and Africa will see an increase of 3 percent. Latin America will see just a slight increase of 0.3 percent. (An increase in capacity is keeping prices low.)
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North America will see modest airfare increases of 2.3 percent driven by stronger U.S. travel restrictions and increased competition in Canada.
Hotel prices will increase an average of 3.7 percent globally. Again, prices fluctuate by region.
Asia Pacific will see increases of 3.5 percent. Eastern Europe will see a rise of 6.3 percent, and Western Europe will increase 6.3 percent. Major increases will be seen in Russia when they host the Summer World Cup during 2018. Rates are expected to be nearly 12 percent higher. Norway will also have a major rise of 14 percent.
The Middle East and Africa will see an increase of just 0.6 percent. Latin America will also see just a small increase of 1.2 percent. A growing supply of accommodations will keep rates down in North America as well.
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