According to the American Express Global Business Travel Forecast released in the region today, the cost of travel throughout the Asia Pacific will experience the largest increase globally in 20101. Fueling the prediction is expectations of increases in both airfares and hotel rates on the back of positive trends in the regional economy and strong growth predictions in some Asia Pacific countries.
The Forecast was produced by eXpert insights, the newly created research practice of American Express Business Travel’s Global Advisory Services. The annual Forecast is the most comprehensive report available in the industry, outlining the pricing trends that are expected to impact the cost of travel in the coming year as well as pricing predictions by region and class of service.
Asia Pacific – Air/Hotel Forecast and Trends
Commenting on the findings, Jonas Borglin Head of Advisory Services for American Express Business Travel, Japan, Asia Pacific and Australia, says, “In 2009, the weakened economy contributed to a seven percent reduction in business travel in the Asia Pacific region forcing travel suppliers to reduce prices and rethink strategies. Next year we expect a turnaround as green shoots in the economy continue to emerge and companies return travellers to the road.”
| Asia-Pacific – 2010 Forecast | ||||
| Region | Airfares | Hotel Rates | ||
| Domestic / Short-Haul (Economy Class) | International / Long-Haul (Business Class) | Mid-Range | Upper-Range | |
| Australia | 1% to 6% | 2% to 7% | 1% to 6% | 0% to 5% |
| China | 3% to 8% | 2% to 7% | 1% to 6% | 1% to 6% |
| Hong Kong | 2% to 7% | 2% to 7% | 0% to 5% | 0% to 5% |
| India | 3% to 8% | 1% to 6% | 1% to 6% | 1% to 6% |
| Japan | 3% to 8% | 2% to 7% | 1% to 6% | 1% to 6% |
| Singapore | 3% to 8% | 1% to 6% | 1% to 6% | (-1%) to 4% |
| Asia Pacific | 3% to 8% | 1% to 6% | 1% to 6% | 1% to 6% |
“The Forecast indicates that 2010 airfares and hotel rates are expected to rise across the Asia Pacific region. We predict hotel rates will rise more than other parts of the world as our region has escaped some of the protracted recession experienced in North America and Europe. Also, corporate travel spending has been comparatively strong thanks to emerging nations such as China and India.”
Said Manoj Chacko, Head, American Express Business Travel, India, "In 2009, the weakened economy contributed to a 7% reduction in business travel in the Asia Pacific region forcing travel suppliers to reduce prices and rethink strategies. Next year we expect a turnaround as green shoots in the economy continue to emerge and companies return travellers to the road. However, the impact of the economic slowdown has driven many companies to finally get strategic about their business travel management. There is an increasing interest among CFOs to manage T&E – their second largest controllable expense - in a more strategic manner. We believe this trend will continue even in 2010 and calculating the return on travel investment will be top of mind for corporates. American Express’ long-standing expertise in the space as a trusted travel management solution provider to large and mid-sized corporates, makes it best placed to capitalize on this burgeoning opportunity."
Global Business Travel Forecast
Looking to the global Forecast, pent up trip demand coupled with supply base changes are likely to cause rates to slightly increase in most travel categories by the end of 2010. Business class airfares in particular are expected to increase in line with reduced capacity and on-going business demand for international travel.
| Global – 2010 Forecast | ||||
| Region | Airfares | Hotel Rates | ||
| Domestic/Short-Haul (Economy Class) | International/ Long-Haul (Business Class) | Mid-Range | Upper-Range | |
| North America | 2% to 7% | 1% to 6% | (-4%) to (-1%) | (-6)% to (-3%) |
| Europe | 0% to 2% | 5% to 7% | (-2%) to 2.5% | (-2.5%) to 2% |
| Latin America | (-3)% to 2% | (-1)% to 2% | (-2)% to 2% | (-6)% to 0% |
| Asia-Pacific | 3% to 8% | 1% to 6% | 1% to 6% | 1% to 6% |
| Global | 0% to 5% | 1% to 6% | (-3%) to 2% | (-4%) to 1% |
A prolonged period of weak demand in the travel industry depressed prices across travel categories in 2009, most notably in hotel, which as an industry cannot reduce capacity as well as airlines and car rental companies. Following this weakened demand in 2009, American Express Business Travel expects a pent up need for travel and meetings to be unleashed in early 2010. Fuel prices, along with sustained signs of a restarting economy, could also generate slight up-ticks in travel category prices worldwide, particularly in Asia Pacific next year.
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“The 2010 Forecast clearly underscores that the complexity of managing business travel and understanding the underlying dynamics of the industry and supply base only becomes more challenging as economic conditions change and business opportunity is global,” said Christa Degnan Manning, director, eXpert insights research for American Express Business Travel Global Advisory Services. “Over the next year we will be monitoring the market closely with pricing benchmarks identifying cost-savings best practices, and supplying on-going market analysis to support companies in paying the optimal price for travel based on market conditions and desired business outcomes. A return on investment approach in travel is more important now than ever before as the economic situation changes worldwide.”
The Global Business Travel Forecast 2010 is available for purchase. To obtain a copy of the Forecast or subscribe to eXpert insights, please email advisoryservices@aexp.com or visit www.businesstravelconneXion.com.
1. Forecast Methodology
The 2010 Forecast is based on a number of primary data sources, including the American Express Business Travel Monitor, the American Express contracted rates database, aggregate transaction reports, Smith Travel Research (STR) Global Hotel Reviews, and for the first time this year, NBTA-IHS Global Insights business travel market sizing research. Projections were based on a combination of these primary sources and interviews with American Express category and regional experts. NBTA-IHS Global Insights and STR data is used with permission.
It examined the following markets: North America (including Canada), Europe, Latin America and the Asia Pacific.
Although the forecasts and projections provided in the report are based on information gathered from internal and external sources that American Express Business Travel believes to be reliable, no representation or warranty is made as to the accuracy of the forecasts or projections made herein. In addition, actual changes in business travel costs could vary significantly from forecasted data, particularly as a result of unforeseen future political, economic and/or environmental events.
All ranges represent forecasted year-over-year increases.
About American Express Business Travel
American Express Business Travel (www.americanexpress.com/businesstravel), a division of American Express Company, is committed to helping its clients maximise the greatest return on their travel investment through increased cost savings, world-class customer service and greater spending control. With clients ranging from small businesses to multinational corporations, American Express Business Travel provides a combination of industry-leading technology, travel management consulting, strategic sourcing and supplier negotiation support, alongside global customer service available online and offline. The Company also provides a dynamic online community (www.businesstravelconneXion.com) harnessing the collective intelligence of those in the business travel industry offering a variety of perspectives, best practices, current research and industry news.
American Express operates one of the world’s largest travel agency networks with locations in over 140 countries worldwide. Total travel sales volume in 2008 was $29.1 billion, including proprietary volume, volume processed through joint ventures, and American Express branded volume processed through its partner network.
American Express Company (www.americanexpress.com) is a leading global payments, network and travel company founded in 1850.