Professional Documents
Culture Documents
Global Travel
Forecast
Global air, hotel,
and ground prices
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 1
Global Macroeconomic Overview
Headwinds and tailwinds
Global economic prospects are improving in 2017, as the International Monetary Fund is expecting 3.5% global economic growth for the year.
This is in contrast to 2016, where global economic growth was 3.1%, its slowest growth since 2009.
2018 should see further improvement as the global economy is expected to grow at 3.6%. The growth is expected to be driven by rising consumer
and business confidence, as well as recovery in manufacturing, investment and trade. Trade has begun to recover around the world after five years of
slow growth. However, there is some concern if protectionist trade rhetoric becomes policy with more restrictions in the United States and other key
markets. If that happens, a recovery is likely to be short-lived. Additionally, withdrawal by key countries from multi-lateral agreements such as Brexit and
the Paris Climate Agreement is also causing concern.
Emerging markets now account for approximately 75% of global economic growth and are central to global performance. Yet tightening financial
conditions could suppress further growth. Meanwhile, developed markets are also exhibiting signs of accelerating growth.
SOURCE: International Monetary Fund, World Economic Outlook Update, April 2017
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 2
2018 PROJECTED GDP
Asia Pacific FRANCE GERMANY GREECE ITALY RUSSIA
While Australia suffers from diminished consumer confidence, the countrys outlook
is positive with rising credit growth in the private sector, increasing commodity prices,
and improved investment in non-mining industries. Chinas economy grew 6.9% in 1.7% 1.5% 2.7% 0.8% 1.4%
Q1 2017, attributed to increases in private and public sectors. Policy-supported efforts
SAUDI SOUTH UNITED ARAB UNITED
targeting growth have led to healthy gains in manufacturing and investment, which are SPAIN ARABIA AFRICA EMIRATES KINGDOM
3.0% 6.2% 7.7% 5.3% 0.6% Economic performance has been mixed in the Middle East and North Africa in 2017
MALAYSIA PHILIPPINES SINGAPORE THAILAND VIETNAM
thus far. Non-oil activities remain strong, yet the oil sector deteriorated notably in Q1
with reductions in crude production given the late 2016 deal among major players,
including the Organization of the Petroleum Exporting Countries (OPEC) members
and Russia. Related, ongoing tension between several Middle Eastern countries for a
4.7% 6.9% 2.5% 3.1% 6.3% variety of reasons and including Iran, Qatar, Saudi Arabia and United Arab Emirates
adds to regional uncertainty.
SOURCE: International Monetary Fund, World Economic Outlook Update, April 2017
SOURCE: IHS Global Insight, International Monetary Fund, Wells Fargo Securities, Rockport Analytics
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 3
Latin America
Latin America should benefit from rising commodity prices and accelerating world
trade into 2018, particularly given strong currency depreciation making exports more
competitive. Economic and social relations between the United States and most Latin 2018 PROJECTED GDP
American countries remain strong, yet there is increased tension and deterioration
UNITED
of relations under the new U.S. administrations trade and immigration policies. CANADA STATES
Latin American countries are also competing with emerging markets in Asia,
making economic and political health essential for them to thrive. While Brexit does
not pose an existential threat, if developed economies including China, the European
Union and the United States are affected, the region could feel secondary impact.
2.0% 2.5%
Global corporate travel buyers should negotiate in local currency only to ensure
North America
market-based pricing.
In Argentina, a new more business-friendly government is aiding its recovery.
Brazil was expected to continue its slow but steady recovery in 2017 from its worst Initial confidence in the new U.S. administration lifted growth prospects in
recession in modern history given lower inflation, improved confidence globally and the United States early in 2017, despite downside risks hinging on both fiscal
a less-tight monetary policy; however, recent corruption allegations are likely to and monetary policy decisions. Of increasing concern is the administrations
impact the Brazilian economy and travel prices there over time. Mexicos economy protectionist position along with other, unconventional viewpoints, which may
is buoyed by solid growth in agriculture, services and merchandise exports, while threaten worldwide stability and economic growth. That said, the growth rate
inflation there has been rising along with fuel prices and interest rates. Chiles of the United States economy, just 1.6% in 2016, is projected to increase to 2.3%
weaker peso supports agricultural exports. Rising oil prices are expected to boost in 2017 with even greater growth potential in 2018.
Colombias outlook. The Peruvian economy remains stable with growing mining
At the same time, optimists speculate Canadas economy could outpace the
investments. Political headwinds are having a severe impact on Venezuelas outlook.
U.S. in 2017. An unexpected 2.3% increase year-over-year in Canadas GDP in
Key elections in 2017 and 2018 will also impact the regions performance.
early 2017, brought on by increases in 15 out of 20 major industries including
manufacturing, resources, wholesale goods and retail, may mean the country
has indeed moved past a slowdown brought on by slumping oil prices.
SOURCE: International Monetary Fund, World Economic Outlook Update, April 2017
SOURCE: IHS Global Insight, International Monetary Fund, Wells Fargo Securities, Rockport Analytics
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 4
Key Risks The Exchange
While interest rates, monetary policy, inflation, job growth and oil prices are common
indicators of economic performance, there are some additional, trends and risks
Rate Effect
to watch heading toward 2018: This Travel Price Forecast is conducted and
presented in U.S. dollars, or USD, which offers easy
New U.S. Administration Policies. The market expects a more favorable corporate
geographical comparison and consistency with
tax policy from the new U.S. administration, which supports continued optimism
in the financial markets and the real economy. However, should these tax cuts be
previous forecasts. At the same time, USD can
delayed or derailed, the prospects for the U.S economy could become unsettled. differ significantly from prices in local currency,
Another key risk to the global economy is potential for reductions in free trade via making it critically important to consider exchange
tariffs or border adjustment taxes, which would create a major headwind to trade in rates when analyzing expectations for price
the U.S and abroad. increases. More specifically, forecasts are influenced
by each local markets currency and whether it
European Politics. The full impact of Brexit is not likely to be felt until 2019 at earliest,
appreciates or depreciates against the USD in 2018.
and with a hung U.K. parliament, EU negotiations may be impacted. There is still much
As an example, the Argentine peso is expected to
to be decided, and the potential economic effect lies mainly in trade agreements
depreciate 7.7% against the dollar in 2018. So while
negotiated with each European Union member. Bilateral open access between the
United Kingdom and other EU members would lead to a much healthier Europe and
we expect Argentinas average air price in USD
global economies, post-Brexit. The world will be watching closely as this unfolds terms to increase by only 0.2%, the expectation
throughout 2018. In addition, the populism that fueled Brexit could also leak into in local terms would be for a gain of 7.9%. The
other parts of Europe. expected gain in purchasing power in USD accounts
for the difference between the two rates.
Emerging markets. Policy-driven rebalancing appears to be moving Chinas enormous
economy in the right direction. India is one of the fastest-growing markets in the world
2018 Foreign Exchange Forecast
and should continue to be into 2018. Both Russia and Brazil are currently rebounding
(year-over-year growth vs US$)
from recession and are expected to experience economic growth in 2018 fueled by Euro Area
France
rising oil and commodity prices, yet both face ongoing political uncertainties. The Argentina S. Korea Germany
U.K.
health of these four major emerging economies remains fragile and should their Venezuela
Japan
Mexico
Australia
Singapore Italy
Denmark Spain
economic progress backslide, there would be consequences for the global economy. India
-8% -4% -2% China
3% 7%
2% 5%
Other geopolitical risks. Terrorist events worldwide in Europe, the Middle East and -8% -7% -6% -5% -4% -3% -2% -1%
0%
beyond are heightening unrest around the globe. The U.S. missile attack on Syria, 1% 2% 3% 4% 5% 6% 7% 8%
the ever-rising nuclear threats from North Korea, South Koreas political concerns, -3%
-6% 4% 6%
and leadership changes across the globe can threaten global economic stability. Colombia $USD
Brazil Indonesia (baseline) New Zealand Russia
In addition, travel bans, electronic device bans, visa waiver issues, government Canada
corruption, possible further oil price volatility, cyber attacks, and growing
protectionism sentiment can all be a headwind for economic growth and derail SOURCE: IHS Global Securities, International Monetary
Fund, Wells Fargo Securities, Rockport Analytics
expectations for 2018.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 5
Technology That Can Take You Places
Technology is moving at a rigorous pace. Particularly in business, technologies can leap frog their
predecessors quickly. For all industries, technology will enable success or ensure failure. And so,
corporate travel buyers must buckle up and embrace whats next. Its coming either way.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 6
Global Air Projections
Airline pricing is expected to increase
The global airline industrys capacity is expected to grow around 7% in 2017 and 6%
in 2018.1 Complicating airline pricing is segmentation of fares to broaden appeal as 2018 AIR PRICE PROJECTIONS
travelers are able to purchase from options including a basic economy restricted
fare or various upgraded fares, with specific service options. 7.5%
7.1%
7.0%
On a macro level, segmentation is changing the broader definition of carriers,
6.5%
blurring the lines that once separated full-service, legacy, low-cost and ultra-low-
cost options. While it may help carriers combat shrinking margins, it introduces new 6.0%
5.5%
challenges for buyers in controlling costs. Some have blocked these fares from their 5.5%
corporate booking tools after observing increased total trip costs using them with 5.0%
ancillary services. Yet, as long as travel policy is adapted to address unbundled, 4.5%
branded fares and travelers are educated to understand the options, branded fares
4.0%
may support both cost control and traveler satisfaction. 3.5%
3.5%
3.0%
Airline prices are expected to rise along with oil prices in 2018. Oil prices have 3.0% 2.8%
hovered below $50 USD per barrel thus far in 2017 after bottoming out in early 2.5% 2.3%
2016 at $29. How an airline is affected by fuel prices depends on its hedging
2.0%
contracts. Some carriers hedged and paid greater than market pricing in recent
1.5%
years, while others benefitted from little to no hedging. Airlines have committed
to reinvesting earnings into equipment and services that benefit customers, 1.0%
while also reducing debt and rewarding shareholders. There is also significant 0.5% 0.3%
capital investment by many carriers to improve or expand terminal facility space. 0.0%
Recurring fuel surcharges should also be watched as oil prices rise. C E E A A A L
C IFI R OP R OP R IC R IC R IC
O BA
PA EU EU AF E E
GL
The U.K./U.S. electronics ban on incoming flights requiring passengers from
I A N N & AM AM
AS R R T IN H
certain airports check their electronic devices, along with the U.S. recently
S TE S TE E AS L AT O RT
implemented restrictions for U.S. entry from certain Muslim-majority countries, are E EA E N
impacting worldwide sentiment and travel spend. Corporate travel programs are
W
D DL
expected to trend traveler-centric in 2018 with an improving economy and cost
MI
tolerance varying by region, industry and traveler type. At stake may be increased
productivity, job satisfaction and employee retentionparticularly for Millennials. While a basic economy fare may appear less costly upfront,
it may be more expensive than an upgraded fare depending
on a traveler's expenses before and during a flight.
1
Crucial Perspective
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 7
Asia Pacific
2018 AIR PRICE PROJECTIONS
9.0% 8.7%
8.5%
8.0% Domestic demand is increasing, particularly in China and India, putting additional
7.5% pricing pressure on key markets in both. This new mindset, along with segmentation
7.0% of airfares, is generating new competition between carriers. Consider British Airways,
6.5% discontinuing free food and beverage on some short-haul flights and instead offering a
6.0% 5.8% fee-based option to better compete with low-cost carriers (LCCs). On the other hand, South
5.5% 5.4% Korean LCC Jeju Air now offers its Side Seat or Sleeping Seat Package on certain routes.
5.0% 4.7% This allows travelers to purchase one or two seats next to their own, giving them additional
4.5% space on crowded low-cost flights and giving the airline a way to collect additional revenue
4.0% 3.9%
on last-minute available inventory. The expanding Singapore-based LCC Scoot is following
3.5%
3.5% the same pattern, and plans to add new long-haul routes to Europe and beyond.
3.0% 2.8%
2.6%
2.5% AirAsia aside, airlines in the region broadly are partnering with GDSs to display basic
2.0% 1.9% economy airfares and grow ancillary fee revenue, also resulting in a move away from
1.5% manual bookings and toward consistency in fare displays. As many of the economies in Asia
1.0% strengthen, weaknesses in infrastructureand airports in particularare increasingly
0.5%
apparent. As the fastest-growing aviation market in the world, Beijing Capital and Hong
0.0%
Kong Airport have reached terminal capacity while Mumbai and New Delhi are expected to
-0.5%
do the same in 2018 and 2021, respectively. Further complicating any solutions is ensuring
-1.0%
air space can accommodate added capacity.
-1.5%
-2.0% While there is no short-term fix to improve the regions air travel congestion broadly by
-2.5%
2018, Singapore Changi Airport recently opened its fourth terminal relieving pressure with
-3.0%
greater capacity and flight frequency. In Indonesia, Jakarta's Soekarno-Hatta Airport
-3.5%
recently completed phase one of its 25 million-passenger-per-year terminal. Beijing New
-4.0%
Airport is slated to open in 2019. With these improvements and others planned over the
-4.5%
next two decades, airport development fees are likely to follow.
-5.0%
-5.5%
-6.0%
-6.5% -6.3% Culturally, local travelers were once unwilling to sacrifice
A A E L service for savings. These same travelers are now using LCCs
LIA IN NG
DI ESIA PA
N
AN
D
OR IFI
C
BA
TR
A CH KO IN
ON JA A L
GA
P
PA
C
GL
O to ensure cost-conscious travel.
S NG D ZE
SIA
AU HO IN W SIN A
NE
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 8
Europe, Middle East & Africa
European travel is anticipated to continue stable growth. Currency
fluctuations in Europe may also further impact airfares in 2018. Air
suppliers are using a two-fold strategy with GDS partners, creating direct
2018 AIR PRICE PROJECTIONS
9.5%
distribution channels to avoid GDS fees while also working with GDSs to 9.0% 8.8%
8.5%
adapt their model to accommodate growing ancillary fees. And, while 8.5%
8.0% 8.0%
travel buyers are taking growing interest in satisfying traveler preferences, 8.0% 7.8%
7.5%
price is still the priority. 7.1% 7.1%
7.0% 6.7%
Domestic routes are expected to be price-sensitive with more low-cost 6.5% 6.3%
6.0%
6.0%
carrier choices, while international trips face continued demand challenges. 5.5%
5.5%
Given limited competition and the upcoming summer 2018 World Cup,
5.0%
Eastern Europe may again have the most significant price increases for air 4.5%
in the region. Travel buyers should book in advance or postpone to ensure 4.0%
3.5%
availability and to avoid short-term price hikes. 3.5%
3.0%
3.0%
Legacy carriers are responding with creative segmentation of pricing for 2.5%
medium-haul flights, which is intensifying already-stiff competition with 2.0%
2016. The carrier, subsidized by Etihad Airways, which owns a minority 29% -1.5%
-2.0% -1.7%
stake,2 is expected to tighten operations accordingly.
-2.5%
Carriers in Middle Eastern and African countries are impacted by -3.0%
ongoing security threats and the oil and gas industry, which is slowly -3.5%
-3.6%
-4.0%
recovering. While economic growth is anticipated over the long term,
RK CE NY AY IA EN E E CA L
ongoing depressed demand throughout 2018 for Algeria, Azerbaijan and UM ND N LY SS AI
N OM OP OP RI BA
GI
NM
A
NL
A
RA RM
A ITA RW RU SP ED D R R F O
EL FI F O SW NG EU EU A G L
Nigeria remains a concern for carriers. B DE GE N KI RN RN
&
E D
T E E A ST
IT T E
UN ES EA
S
LE
W
I DD
M
While there is uncertainty about Brexits impact on aviation between
EU countries, the earliest estimate for the United Kingdoms
departure from the EU is spring 2019, signaling clear skies for 2018.
2
FVW
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 9
Latin America
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 10
North America
Historically, LCCs have gone after legacy carrier markets; however, the opposite is now just
as true. Consider Alaska Airlines and Virgin Americas joint deals, enabling both a greater
presence on the West Coast, including service in traditional Southwest Airlines' markets, and
perhaps driving fares down. Canadian airlines are expected to aggressively compete given 2018 AIR PRICE PROJECTIONS
new market entrants and capacity growth, about 11% in 2017 and 12% in 2018.
5.0%
Travel programs have long made traveler distinctions based on organizational level or travel
4.5%
frequency but the ability to determine policy for a traveler based on anticipated trips
return on investment is novel. Strategic travel analytics are expressed through reason 4.0%
codes, pre-trip approvals and reporting, as well as employee and specific business data. 3.5%
3.5% 3.3%
U.S.-based carriers met with members of the United States House Transportation and 3.0%
Infrastructure Committee in Q2 2017. Committee members plan to intervene with
widespread mandates for reform if U.S. carriers do not quickly resolve growing public
2.5% 2.3% 2.3%
dissatisfaction given recent well-publicized passenger incidents. 2.0%
The U.S.-implemented electronics ban imposed on direct flights originating at 10 airports 1.5%
in eight countries in Q1 2017, is being lifted for airlines and airports that meet new U.S.-
1.0%
mandated security requirements, which include enhanced explosive detection screening
technology and are expected to create additional processing time for travelers. No official 0.5%
announcement has been made by the UK, which has a similar ban in effect. In addition, 0.0%
portions of a U.S. terrorism-related travel ban, restricting entry into the U.S. from six
Muslim-majority countries, went into effect after the U.S. Supreme Court temporarily lifted DA TE
S
IC
A
B AL
A A R
N ST E LO
CA
legal blocks and will review the full case in Fall 2017. Cost estimates for the temporary ban
D A M G
are at more than $1 billion in lost industry spending. The U.S. also announced plans to
I TE T H
UN R
privatize its air traffic control system, a move supported broadly by commercial airlines
and the air traffic controllers union, despite criticism that it may give the airlines too much NO
control and increase fees for smaller aircraft.
With the regions air travel market nearly flat year-over-year in early 2017, competition is fierce between
carriers who also now compete on branded fares rather than only on bundled fares or by carrier type.
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 11
Global Hotel Projections
Impact from mega mergers likely to be felt
There is a progressive push from suppliers to move corporate buyers away from 2018 HOTEL PRICE PROJECTIONS
fixed, negotiated hotel rates and toward dynamic rate pricing. While technology can 7.5%
accommodate dynamic rates, historically the rates have not proven advantageous for 7.0%
buyers. As the industry moves toward a 15-20% discount off published rates, a blended 6.6%
6.5% 6.3%
program that offers both fixed and dynamic rates with maximum thresholds in low-
volume markets may work for both suppliers and buyers. 6.0%
5.5%
While hotel mega merger news has quieted down, the impact is expected to be first
felt with the 2018 hotel RFP season. Most buyers are likely to be working with one 5.0%
contact now for Marriott/Starwood to address all issues across the combined entitys 4.5%
properties and the same may soon be true for others. Speculation is also growing
4.0% 3.7%
about how long mega hoteliers will operate with numerous brands to market and 3.5%
support rather than simply combining operations. In a move to diversify, Airbnb added 3.5%
Trip in late 2016, offering to connect individuals with fee-based tours and activities. 3.0%
2.9%
Meanwhile, traditional hotels are also responding to growing demand for traveler
2.5%
experiences by ramping up value-added, concierge services to deliver beyond the walls
of their hotel. 2.0%
1.5%
Smarter hotels are now assumed with hotels investing in beacon technologies,
1.0%
messaging, in-room entertainment and more. Mobile apps are expected to be used
0.6%
more and more by tech-savvy guests to check in and out, unlock their hotel room 0.5%
door, operate the television remotely, control room temperature and more. And, while 0.0%
big data is available, hotels havent determined how to personalize it.
-0.5%
-1.0%
-1.5% -1.2%
Sharing economy properties continue to compete for E E
IFI
C
OP OP IC
A
IC
A
IC
A
B AL
corporate travel business although with limited success given C R R R R R O
PA EU EU AF A ME A ME GL
government pushback around the world and continued need I A N N & N
AS T ER T ER A ST TI RT
H
for traveler services such as room service, laundry and security. E S S E L A O
W EA LE N
D D
M I
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 12
Asia Pacific
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 13
Europe, Middle East & Africa
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 14
Latin America
rooms will be constructed in Mexico, Chile, Argentina, Brazil, Colombia and Peru -7.0%
between late 2016 and 2025, a 57% increase in supply.3 -8.0%
-9.0%
-8.7%
3
Impact of Economic Transformation on Latin Americas Lodging Industry
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 15
North America
Hoteliers may be banking on economic growth as demand has leveled off since
mid-summer 2016, yet supply is expected to continue growing steadily through
2018 HOTEL PRICE PROJECTIONS
2018. The West Coast slowed but still showed some mid- to high-single-digit growth
while the East Coast remained flat, especially in New York City at -0.5% and in 5.0%
Boston at 2-3%. Canadian cities were higher with Toronto at 4-5% and Montreal at
4.5% 4.4%
3.4%. With international travel projected to grow 4% in 2017 and 2018, U.S. hotel
growth is expected primarily in secondary markets along with the West Coast and 4.0%
in Washington D.C. While Alberta will struggle until oil prices further improve, 3.5%
Toronto, Vancouver, and Montreal are expected to maintain good pricing power 3.5%
amid a weak Canadian dollar. 3.0% 2.9%
2.7%
A potentially growing concern is some hoteliers implementation of a 48-hour 2.5%
cancellation policy for non-negotiated rates. Buyers should review cancellation terms
carefully and negotiate 24-hour or same-day cancellation policies as necessary, which
2.0%
could be an opportunity to improve traveler compliance. In addition, as recent 1.5%
CWT Solutions Group analysis indicates last-room availability, or LRA, rates have been
overvalued in many cities, buyers should consider utilizing a higher percentage of 1.0%
non-last-room availability, or NLRA, rates to drive additional savings opportunities. 0.5%
The regions hotel programs in North America are focused on improving the 0.0%
S AL
traveler experience. As hotels work to create brand loyalty via one-on-one traveler
DA A
relationships, travel managers should work with hoteliers to create a win-win that A ATE R IC B
N ST E LO
CA M
keeps travelers in policy at preferred rates using preferred properties. The supplier
D A G
pitch for dynamic rate pricing is expected to be increasingly considered in 2018
I TE T H
UN R
given average participation rates of 2% in 2016 and 5% in the first half of 2017. Buyers
should target a blended program with multi-year dynamic rates in low-volume NO
markets and include reasonable rate caps.
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 16
Global Ground Transportation
Ground pricing is expected to increase moderately
Corporate travel buyers should budget for a slight price hike in 2018 as the global
car rental industry improves. Market growth is estimated at a compound annual
growth rate of 5.5% from 20172022, as fueled by a broader economic recovery
and related increased corporate travel and tourism. As demand improves, rental
car companies shift from a simple market-share focus toward profitability All segments of the ground transportation industry are
goals. Market dynamics beyond travel are also squeezing rental car company expected to see further innovation in 2018, including
economics on both sides. Industry experts predict record new car sales over the
digitization and mobile apps; green and autonomous,
next five years, pushing up per unit fleet costs, while used car pricing is expected
to fall 50% during the same period. This will severely impact residual value for self-driven vehicles; higher-speed rail options and more.
used rental cars and make current rental car pricing unsustainable.
Market-specific regulations for curbing emissions, along with rising oil prices are
likely to impact the well-being of ground transportation suppliers. With lower
emissions requirements in place in several countries, leading companies are
already increasing availability of green, or environmentally friendly, rental cars. 2018 GROUND PRICE PROJECTIONS
Sharing economy suppliers including Uber, Lyft and others, are expected to
continue double digit growth, likely more than 14% in 2017 and upwards of 10% in 2.0%
2018, before settling down into single-digit growth for 2019. Their growth is most 1.5%
impeded by costly regulations and government bans, which impact their easy-to- 1.0% 1.0%
1.0%
use, attractive low rates. After selling its business in China to Chinese competitor 0.7% 0.6%
0.5%
Didi Chuxing in late 2016, Uber continues to aggressively compete with Ola 0.5% 0.2%
0.1%
in India and appears laser-focused on Latin America and Southeast Asia for 0.0%
international growth. At the same time, Uber continues to diversify with services C E PE A A A AL
such as food delivery, ride-sharing and helicopter transportation. C IFI R OP RO R IC R IC R IC
O B
PA EU EU AF A ME A ME GL
I A N N & N
AS T ER T ER A ST TI RT
H
S S E L A O
E EA LE N
W D
I D
M
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 17
Asia Pacific
The economies of China and India
are expected to drive the car rental
market in Asia Pacific.
Europe, Middle East & Africa
2018 GROUND PRICE PROJECTIONS
Increased competition in Australia, continued uncertainty 2.0%
in mining and slowly improving oil and gas industries will 1.5%
1.0%
result in flat rates for 2018. Business continues to grow in 1.0%
0.5% 0.6%
China, with most major car rental and sharing economy 0.5%
0.1% 0.1% 0.2%
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
suppliers having a presence. Growth in India remains 0.0%
-0.5% -0.1%
tempered by the required driver that comes with car
rentals. Sharing economy suppliers Didi Chuxing in China, L
UM RK ND CE NY LY AY AI
N EN M
OP
E
OP
E CA BA
Ola in India, and Grab in Southeast Asia have all achieved GI A A N A ITA RW SP ED GD
O
R RI
EL NM NL RA RM O SW EU EU
R A F
GL
O
economies of scale that make them key competitors vs. B DE FI F
GE N KI
N
N N &
D R R S T
IT
E TE ST
E A
car rentals, black car service and taxis.
UN W
ES EA L EE
DD
Meanwhile, Malaysia and Singapore are pushing MI
ahead with a high-speed rail line from Kuala Lumpur The continued expansion of Enterprise, the re-emergence of Budget, and the continued impact of sharing economy
to Singapore. Construction started in 2017 but is not suppliers along with black cars and taxis, are creating downward pricing pressure for 2018. Russia continues to see limited
expected to be complete until 2026. Estimates suggest demand, although with the World Cup scheduled for summer 2018, buyers may want to work with suppliers further in
the new rail trip will take just 90 minutes compared to: advance to ensure their needs are still met. Traditional black car and sharing economy suppliers will be available as well.
three hours by air when including travel and check-in
Rail continues to be a viable alternative to air travel throughout Europe. Often, travel time differences between a train
time to and from the airports; five hours by road; and
route and a faster air flight are nullified by time spent commuting to and from airports, check-in and security processes.
seven hours by conventional rail.
South Africa expects flat to slightly modest increases in ground transportation given its reliance on oil companies.
2018 GROUND PRICE PROJECTIONS Peer-to-peer car sharing and ride sharing have had minimal impact. Sharing economy suppliers have seen success
2.5% levels vary as Uber and Lyft have been banned in some markets and restricted from airport access in others as
2.0% government officials turn their attention to regulating the option to ensure passenger safety and a level playing field for
2.0%
1.5% all ground transportation suppliers.
1.0% 0.7% 0.6%
0.5%
0.0%
0.0% 0.1%
With high competition in Western Europe, including France, Germany and the
LIA D IA ND FIC AL United Kingdom, rental car companies have not been afraid to aggressively price
A IN A CI OB
TR AL PA GL and pursue market share.
S ZE SIA
AU W A
NE
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 18
Latin America
Brazil and Mexico are anticipating increased
demand for car rentals in 2018 as their
economies improve.
2018 GROUND PRICE PROJECTIONS
Regional car rental company, Localiza, entered into a strategic
partnership with Hertz including the purchase of Hertz Brazil 5.0% 4.6%
in Q4 2016. The move expands Localizas market share to 11%, 4.0%
leading the market that is still heavily fragmented. Meanwhile,
3.0%
Enterprise expanded in Q2 2017 with new locations in Belize,
Honduras, Mexico, Tortola, Trinidad and Tobago, Turks and 2.0%
1.1% 1.0% 1.0% 1.0%
Caicos Islands and Uruguay, as well as eight airports in Mexico 1.0% 0.5% 0.5% 0.5% 0.6%
and a location in Cancun. Avis Budget Group continues to
0.0%
expand their presence and regional competitors Easy Taxi and
NA IL LE CO DA
S A A AL
Cabify, a black car service for corporate travelers, remain strong
I Z I I TE IC IC B
NT RA CH EX A A R R O
N ST ME ME
as well. Pricing is expected to stabilize.
GE
B M CA D A A GL
Uber is banking on growing its Latin America business AR E N H
N IT TI RT
especially given its recent departure from the Chinese market. In U LA N O
Buenos Aires, Uber and the government are disputing whether
Uber is a taxi service and should register as such. In Bogota and
Rio de Janeiro, taxi cab drivers are campaigning against Ubers
entry into the market. In Lima, a strong, established taxi cab
industry is making it difficult for Uber to break in. Quality road infrastructure and limited railways, along with improved income
per capita and increased corporate travel, are expected to push up rental car
North America rates even further in North America, the global leader with 44% of the market.
Still a low-margin business, rental car companies have adjusted their mix to include more leisure customers, implemented operational efficiencies through six sigma improvements, and
made investments in technology to better manage fleets and improve utilization. While rental car companies are renting cars to Uber and Lyft drivers, the sharing economy suppliers are
unwelcome in certain markets. Texas, for example, will not allow sharing economy vehicles to operate at airports.
Taxi cabs are also upping their game with a ride-hailing app for taxis. Curb is expected to make traditional cabs more competitive with automated cab hailing with the press of a
button, optional advanced bookings, automatic e-payment, digital receipts, predictable metered fares and no surge pricing. Passengers may soon experience other taxi upgrades such as
tablets with third-party apps as well as a USB charger and Wi-Fi.
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 19
Recommendations Understand your program is sustainable
only if you create a win-win situation for
you and your suppliers. Balance priorities,
Corporate travel is ever-changing. opportunities and risks to the benefit of all.
The most successful programs keep
a watchful eye, reevaluating strategy
often and adapting as necessary.
Consider the following: The supplier landscape is rapidly changing. Take the
time to stay informed about supplier activity and
how it impacts your program, maintaining flexibility
to adapt as new risks emerge and markets evolve.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 20
Recommendations
> Find and leverage your unique > Travel managers should work with hoteliers > Be prepared with a strong negotiation strategy
value proposition as increasing to keep travelers in policy as hotels work to given cost pressures within the rental car industry
cost pressures from organized labor create brand loyalty via one-on-one traveler to raise rates. Knowing your current global
negotiations and anticipated fuel relationships. patterns, how costs are distributed, and the global
price increases result in a greater market placeincluding information about strong
focus on yield for airlines. > Leverage dynamic pricing inclusion based regional supplierswill provide leverage.
on opportunity. Utilizing best available rate
> Be prepared for a shifting comparisons, identify your sweet spot and > Require preferred suppliers to provide
landscape as many carriers change negotiate multi-year agreements on the full transactional data from bookings to
inventory and product offerings. dynamically priced hotels to drive efficiency. gain visibility into how much your organization
is being charged in ancillary fees vs. a simple
> Understand your total global > Limit the annual RFP process to the highest rate assessment, leading to more informed
market footprint and spend as a value hotels and identify key negotiating levers negotiations.
key factor in negotiations. such as traveler behavior and day of week usage.
> Evaluate all ground transportation options,
> Focus on policy-based > Develop communication channels within looking for alternatives to reduce costs and
improvements such as airline cabin your organization and continually highlight the enhance the travelers experience. Depending on
class allowances or carrier advanced benefits of your hotel program to both travelers the specifics of a travelers itinerary, rental car, rail,
purchase compliance to help and the organization more broadly. on-demand, chauffeured service and/or taxis can
control costs. all offer an appropriate fit.
> Monitor your travelers and suppliers after the
RFP season, including hotel utilization outside > Watch for overcharges on items covered in your
of preferreds and availability of preferred rates, contract. Incorrect refueling, GPS charges and
taking appropriate action as necessary. vehicle damageparticularly outside of the
U.S.are common errors that increase total costs.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 21
APPENDIX I
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 22
APPENDIX II
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 23
APPENDIX III
7.1%
7.0%
6.6%
6.0%
5.4%
5.0%
4.0%
3.0%
2.2%
KEY MARKET BY CLASS OF SERVICE 2.0%
-5.0%
-6.0%
-6.3%
-7.0%
MALAYSIA
PHILIPPINES
SOUTH KOREA
TAIWAN
THAILAND
VIETNAM
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 24
APPENDIX III
ADDITIONAL TRAVEL PRICE DATA | Europe, Middle East & Africa airfares
LUXEMBOURG
NETHERLANDS
POLAND
PORTUGAL
SWITZERLAND
-5.0% -5.0%
-5.0% -4.9% -5.0%
-6.3%
-7.0% -7.0%
ALGERIA
AZERBAIJAN
BAHRAIN
EGYPT
ISRAEL
KENYA
KUWAIT
LEBANON
MOROCCO
NIGERIA
QATAR
SOUTH AFRICA
-7.2%
-8.0%
BULGARIA
CROATIA
ESTONIA
HUNGARY
LATVIA
LITHUANIA
ROMANIA
SERBIA
TURKEY
UKRAINE
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 25
APPENDIX III
ADDITIONAL TRAVEL PRICE DATA | Europe, Middle East & Africa airfares
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 26
APPENDIX III
LATIN AMERICA
TOTAL
LATIN AMERICA - KEY MARKET BY CLASS OF SERVICE
AIR
2.0% BUSINESS ECONOMY TOTAL
MARKET
1.2% Continental Domestic Intercontinental Continental Domestic Intercontinental AIR
1.0% ARGENTINA -1.6% N/A -0.1% -1.8% 0.2% 0.3% 0.2%
BRAZIL 1.1% -2.8% -4.0% -0.9% -2.2% -2.7% -1.9%
0.0 CHILE 2.4% N/A 5.9% -1.4% 5.8% 5.3% 3.2%
MEXICO N/A 1.5% 3.0% 2.0% 1.0% 2.0% 1.5%
-1.0% LATIN AMERICA 0.6% 1.5% -0.5% 0.3% 0.2% 0.3% 0.3%
-2.0% -1.8%
-3.0%
COSTA RICA
PUERTO RICO
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 27
APPENDIX III
TOTAL
AIR
UNITED STATES METRO MARKET FORECAST
4.0%
3.5%
3.3%
3.0% 2.9% 2.9%
2.7% 2.7%
2.2% 2.4% 2.4%
2.1% 2.2% 2.1% 2.1%
2.0%
1.9%
2.0% 1.8%
1.6%
1.8%
1.7% 1.7% 1.9% 1.9%
1.5% 1.5%
1.4% 1.3%
0.9% 1.0%
1.0%
0.6% 0.5%
0.4% 0.3%
0.1%
0.0
ECONOMY
BUSINESS
TOTAL
ECONOMY
BUSINESS
TOTAL
ECONOMY
BUSINESS
TOTAL
ECONOMY
BUSINESS
TOTAL
ECONOMY
BUSINESS
TOTAL
ECONOMY
BUSINESS
TOTAL
ECONOMY
BUSINESS
TOTAL
ECONOMY
BUSINESS
TOTAL
ECONOMY
BUSINESS
TOTAL
ECONOMY
BUSINESS
TOTAL
ECONOMY
BUSINESS
TOTAL
ATLANTA BOSTON CHICAGO DALLAS HOUSTON LOS ANGELES NEW YORK SAN FRANCISCO SAN JOSE SEATTLE WASHINGTON DC
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 28
APPENDIX III
TOTAL
HOTEL
ASIA PACIFIC
9.0% 8.6%
8.0%
7.0%
6.2%
6.0%
5.0%
4.2%
KEY MARKET BY CLASS OF SERVICE
4.0%
MARKET MIDSCALE UPSCALE TOTAL HOTEL
3.2%
AUSTRALIA 5.2% 6.1% 5.7%
3.0%
CHINA 6.2% 5.1% 5.7%
2.0% HONG KONG 1.1% -1.6% -0.2%
1.4% INDIA 3.2% 3.5% 3.3%
1.0% JAPAN -3.3% -4.3% -4.1%
SINGAPORE 4.4% 2.8% 3.2%
0.0
ASIA PACIFIC 3.3% 3.8% 3.5%
-1.0%
-2.0%
-3.0% -2.8%
-4.0%
MALAYSIA
PHILIPPINES
SOUTH KOREA
TAIWAN
THAILAND
VIETNAM
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 29
APPENDIX III
ADDITIONAL TRAVEL PRICE DATA | Europe, Middle East & Africa hotel rates
MIDDLE EAST & AFRICA
8.0%
7.1%
EASTERN EUROPE 7.0%
2.0% 1.9%
8.0% 1.0%
-3.5%
3.0% -3.0% -4.0%
-4.2%
2.0% -4.0% -5.0%
-4.2%
1.0% -5.0% -6.0%
0.1% -6.3%
0.0 -6.0% -7.0%
-6.2%
-7.4%
-1.0% -0.8% -7.0% -8.0%
BULGARIA
CROATIA
ESTONIA
HUNGARY
LATVIA
LITHUANIA
ROMANIA
SERBIA
TURKEY
UKRAINE
ALGERIA
AZERBAIJAN
BAHRAIN
EGYPT
ISRAEL
KENYA
KUWAIT
LEBANON
MOROCCO
NIGERIA
QATAR
SOUTH AFRICA
GREECE
IRELAND
LUXEMBOURG
NETHERLANDS
POLAND
PORTUGAL
SWITZERLAND
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 30
APPENDIX III
ADDITIONAL TRAVEL PRICE DATA | Europe, Middle East & Africa hotel rates
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 31
APPENDIX III
LATINTOTAL
AMERICA - TOTAL HOTEL LATIN AMERICA - KEY MARKET BY CLASS OF SERVICE
HOTEL
1.0%
0.3% MARKET MIDSCALE UPSCALE TOTAL HOTEL
-3.0%
-3.4%
-4.0%
COSTA RICA
PUERTO RICO
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 32
APPENDIX III
6.0%
5.5%
5.2% 5.3%
5.1% 5.0%
4.9%
5.0% 4.8% 4.8% 4.9%
4.4% 4.5%4.4%
4.2% 4.3%
4.0%
4.0%
3.4% 3.3%
3.1% 3.1% 3.0%
3.0% 2.8% 2.8%
2.5% 2.6%
2.1%
2.0% 1.9%
1.7%
1.0%
0.6%
0.4% 0.5%
0.0
-1.0%
-2.0%
-2.0%
-2.2%
-2.5%
-3.0%
MIDSCALE
UPSCALE
TOTAL
MIDSCALE
UPSCALE
TOTAL
MIDSCALE
UPSCALE
TOTAL
MIDSCALE
UPSCALE
TOTAL
MIDSCALE
UPSCALE
TOTAL
MIDSCALE
UPSCALE
TOTAL
MIDSCALE
UPSCALE
TOTAL
MIDSCALE
UPSCALE
TOTAL
MIDSCALE
UPSCALE
TOTAL
MIDSCALE
UPSCALE
TOTAL
MIDSCALE
UPSCALE
TOTAL
ATLANTA BOSTON CHICAGO DALLAS HOUSTON LOS ANGELES NEW YORK SAN FRANCISCO SAN JOSE SEATTLE WASHINGTON DC
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 33
APPENDIX III
1.0% 1.0%
FRANCE 0.0% 0.0% 0.0%
1.0% 1.0% 1.0%
0.5% 0.5% 0.5% 0.5% GERMANY 0.0% 0.0% 0.0%
0.0% 0.0% ITALY 0.0% 0.0% 0.0%
0.0 0.0 0.0
SPAIN 0.0% 0.0% 0.0%
-0.5% -0.5% SWEDEN 0.0% 0.0% 0.0%
-1.0% -1.0% -1.0%
SWITZERLAND -0.5% -0.5% -0.5%
AUSTRIA
GREECE
LUXEMBOURG
NETHERLANDS
POLAND
PORTUGAL
HUNGARY
ROMANIA
TURKEY
ISRAEL
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 34
APPENDIX III
TOTAL
GROUND UNITED STATES METRO MARKET FORECAST
2.0%
1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
1.0%
0.0
MIDSIZE
FULL SIZE
TOTAL
MIDSIZE
FULL SIZE
TOTAL
MIDSIZE
FULL SIZE
TOTAL
MIDSIZE
FULL SIZE
TOTAL
MIDSIZE
FULL SIZE
TOTAL
MIDSIZE
FULL SIZE
TOTAL
MIDSIZE
FULL SIZE
TOTAL
MIDSIZE
FULL SIZE
TOTAL
MIDSIZE
FULL SIZE
TOTAL
MIDSIZE
FULL SIZE
TOTAL
MIDSIZE
FULL SIZE
TOTAL
ATLANTA BOSTON CHICAGO DALLAS HOUSTON LOS ANGELES NEW YORK SAN FRANCISCO SAN JOSE SEATTLE WASHINGTON DC
Forecasted rates are indicated in USD and might have different values when translated to local currencies.
2017 Global Business Travel Association and its affiliates. CWT 2017. All rights reserved. 35