Skift Take
It turns out that 2019 is no longer a good year to compare prices to. That should be a relief to anyone trying to explain why their travel budget looks so different now.
Business travel expenses are expected to steady next year, though at price levels surpassing historical averages, according to an industry forecast released Thursday.
Travel management company CWT and the Global Business Travel Association predicted that prices across various segments will show modest but steady increases through 2025.
The bottom line: Travel managers face higher costs and must adjust budgets and strategies accordingly.
By the Numbers
- Air: Global ticket prices are expected to rise 0.6% in 2025, according to an analysis of tens of millions of bookings by CWT for travelers.
- Hotels: Room rates are forecast to increase by 2.6% globally in 2025.
- Car rentals: Prices are projected to climb 2.4% in 2025.
- Meetings and events: The cost per attendee per day may rise 4.3% to $169 in 2025. This jump reflects increased costs for food, beverage, venue, and labor. Event technology costs are also rising because many events are now hybrid.
What to Watch
- Elevated prices. “Lasting changes on the supply side that have created a ‘new normal’,” said Rich Johnson, VP solutions group at CWT. “So using 2019 as the baseline for spend comparison measurement is no longer helpful.”
- New anchor prices. Labor and supply chain constraints will linger, propping up hotel and airline costs. Johnson said that focusing on trips with the highest return on investment and strategic supplier relationships will be crucial.
- Better budgeting. Expect many corporations and travel managers to adopt “a zero-based budgeting approach.” This involves breaking down trips or meetings, and going through each expense, category by category, to determine from scratch what is essential. It’s more precise than taking last year’s budget and adding an inflation adjustment.
- Normalization. Look for a rebalancing between business and leisure travel demand. “Even though business travel volumes could outpace pre-pandemic levels in 2025, a likely softening of leisure travel demand will keep the pricing environment in check,” said the CWT and GBTA report.
- Sustainability concerns. Investor pressure and new regulatory requirements may also increase the cost of business travel. Expect more fees to support sustainable aviation fuel, carbon offsets, or investments in electric vehicles.
- Regional variations. Some parts of the world will see more significant cost hikes. For example, ground transportation in Latin America is forecast to increase 11% this year and 7.9% next year.
Regional Outlook
- Asia-Pacific: Expect muted price growth in 2024 of 2.3% and a more normalized rise in 2025 of 1.6%.
- Europe, Middle East & Africa: In 2023, this region had an average business trip price of $785, compared to other regions. Prices will rise by 1.5% this year and by 1.4% next.
- Latin America: Price growth is forecasted to be 2.6% this year as airlines have enjoyed healthy demand for air travel in Latin America. However, the region has struggled to add capacity due to an ongoing aircraft shortage. The 2025 prediction is for only 1.6% growth as an average across the region.
