Tis the season. No, it’s not time for our Annual Food Day, also known as Thanksgiving (although the day is so close one can almost smell the turkey and dressing….). Nor is it time for Santa Claus’s grand entrance (although, just to let you know, as of this date you have under 50 shopping days left before Christmas). What we are referencing is the time of year when all the “experts” tell us what the travel industry will look like in the coming year. These Nostradamus-wanna-be’s look into their collective crystal balls and give us forecasts, prognostications and warnings of what companies can expect when traveling in 2014.
There are many sources of travel industry predictions. We here at TravelPlex have opted for a more conservative approach when offering prophecies of the future – especially the travel industry, and have taken a blend of many different industry sources. Below are cumulative projections for airfare, hotel and car. These are not to be used as a basis of budgets, rather predictions of the coming year based on industry trends. In other words, liken this to the widely subscribed to prophecy of the Cardinals in six! Well, these may be a little more accurate than that…
Corporate travel forecast predictions offer a wide spectrum of changes to North American airfares. Forecasts ranges from year-over-year increases of as much as 3 percent for short-haul coach-class fares and decreases as much as 5 percent for long-haul coach class. Fluctuations to business-class airfares fall somewhere in between, with declines of as much as 18 percent for short-haul business-class fares and increases of as much as 8 percent for long-haul business class.
The overall decline projected for North American airfares will result from intensified competition from low-cost carriers (i.e. Southwest, JetBlue, Virgin America, etc.) and with corporate travel policies becoming more stringent in regard to business-class travel. However, unresolved consolidation among major U.S. airlines (American and US Airways) may balance these expected declines.
Fuel cost projections for 2014 are all over the board. Two publications project bullish fuel prices in the range of what was paid in 2009 ($2.60 per gallon). Another sited increases of well over $3.50 per gallon of fuel. One expert took the path of least resistance and projected “little if any change in the cost of crude oil”. With such a wide gulf (pardon the intended pun), it’s hard to say who will come out the winner on this one. One thing is for sure; travelers will not see any price break even if fuel prices do drop.
Airline fees are here to stay. Travelers have been, and will continue to be charged for everything from checking bags, seat assignment, early boarding and even printing out boarding passes. These fees are helping airlines' ancillary revenue soar to record heights. In recent years, carriers around the world, especially in the U.S. and Europe, have added or raised fees and it has added billions to the bottom line of nearly every airline in the world
For North American hotels, the 2014 forecast range is much slimmer. Predictions of a 2 percent to 4 percent year-over-year increase is anticipated for “moderate" hotel rates while a 3 percent to 5 percent increase for "upper-range" hotel rates. “Value” properties are anticipating continued growth, as new builds continue to add inventory to the North American market. Increases in value hotels could push 5 percent, as companies continue their attempts to push away from expensive full service properties. These moves will ultimately drive down average daily rates (ADR’s).
The forecasts for individual cities are expected to vary widely. Hotel rates in North America's main travel regions and key business and tourism destinations such as New York, Atlanta and Chicago — will likely continue to expand. Secondary locations like St. Louis, San Diego and Houston have become saturated with supply and are expected to be more competitive. Remember this when negotiating hotel rates in these cities.
It is predicted that car rental rate will realize a very small increase of 1 to 2 percent year over year. Car companies have tried for over a decade to increase rates 5 percent+ YOY, but have so far been unable to due to their increasing size of fleets. Supply continues to outpace demand, and with the US car industry in its current state, will for the foreseeable future. Car rental companies may attempt to pass along higher fleet costs to “drive” profits. Increased profits will come from rental car re-sales and will buoy car rental company’s profits for the next few years.
The increased trends of companies relying on the Internet for their business travel will continue to fade. More and more companies are moving toward a managed travel program, allowing TMC’s to leverage their travel spend and provide significant savings and discounts. Utilization of on-line bookings such as Concur Travel and GetThere will continue to grow as well, with companies wanting to offer a managed on-line tool to their travelers.