Global travel pricing set to slow down in 2020; flights to rise 1.2%, hotels 1.3%

After posting sharp rises in 2019, prices in the global travel industry are likely to slow in 2020, with flights rising a modest 1.2%, hotels rising only 1.3%, and rental car rates up 1%, according to the sixth annual Global Travel Forecast, published today by CWT and GBTA. While the global economy is doing well overall - and expected to grow a solid 3.6% in 2020 - a raft of uncertainties are set to put a damper on pricing.

"The risks and ambiguity have increased over the past few months - not least the threat of escalating trade wars, the impact of Brexit, possible oil supply shocks, and the growing likelihood of recession," said Kurt Ekert, CWT's President and CEO. "This forecast will help travel buyers make the right decisions in an increasingly challenging environment."

"Technological advancements and an increasingly volatile economic and political landscape across the globe have changed the way today's travel buyers need to do their jobs," said Scott Solombrino, GBTA COO and Executive Director. "This annual forecast provides insights into the key drivers forcing these shifting priorities and gives a road map for travel buyers looking to plan their 2020 travel programs."

Asia Pacific

Asia's expansion has slowed down due to worsening US-China relations, tighter global financial conditions, and natural disasters. But the region remains the most dynamic, with steady GDP growth, benign inflation, and a sense of optimism.

Air: In Asia Pacific, the shutdown of India-based Jet Airways' operations in April created a gap in the market for some key routes, and the reduced competition has meant higher airfares - but with other airlines adding capacity to fill the vacuum, fares have begun to normalize.

Hotel: Asia's hospitality industry is booming with hotel investment volumes predicted to grow 15% year-on-year. Japan will host the Rugby World Cup later this year, and the Olympic and Paralympic Games in 2020, which will boost visitor numbers to the region. The Japanese hotel market is seeing a sharp increase in supply to accommodate the anticipated surge in visitors to the country during these events.

Ground: State-owned automaker SAIC Motor announced in 2019 that its car rental brand Xiang Dao will provide a business car rental service to companies replacing the existing venture it currently has operating under the AVIS Budget Group branding. Major players in the car rental service in China include Car Inc, eHai, Shouqi car rental and Yongda. We expect SAIC Motor to be a competitive service provider because it has car capacity and business car rental operation experience from AVIS. SAIC Motor’s entry will further intensify competition in the business car rental market.

In China, steady demand and increased competition will hurt car suppliers. Across Asia Pacific, ride-sharing is booming, with many companies allowing their employees to use these services for business travel. Providers like Didi Chuxing, Grab, Go-Jek and Ola are pursuing aggressive expansion plans, while also taking steps to put more stringent safety measures in place.

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