Airfare, Hotel Prices Prime for Increase

Study reveals marketplace risks which could result in higher rates

Flyers planning business and leisure travel could pay more in the coming year, due to a combination of mega-mergers and ancillary costs attached to the usual fares. The 2017 Global Travel Price Outlook, an annual study completed by the Global Business Travel Association and Carson Wagonlit Travel, suggests that prices leading into the rest of the year will continue to climb.

While global airfare is expected to see only an overall price increase of 2.5 percent, ancillary fees (such as baggage fees or upgrades) will contribute more to airfare prices. In 2015, add-ons added over seven percent to airlines’ incomes.

Air travel in North America is projected to increase by 3.7 percent in the next year, which could be the highest spike of any region. North America will also lead the price spike in hotel rooms as well, but for a different reason.

While the entire market is projected to see a four percent rate rise, West Coast cities could experience a higher price hike due to an availability shortage and more demand from the technology boom. Meanwhile, East Coast cities may drop in price due to a surplus of available rooms.

“We are seeing relatively low, inconsistent and in some cases fragile economic growth,” Kurt Ekert, president and CEO of Carson Wagonlit Travel, said in a press release. “Travelers and travel managers need to understand their travel patterns and spend, and be alert to the impact of economic uncertainty and volatility.”

The study blames the rise of ancillary fees and mergers for the increase in pricing, but warns that the overall effects of consolidation – like that between Marriott and Starwood – may not be fully actualized until 2018. The GBTA-Carson Wagonlit Travel review could foreshadow more bad news for the business side of the industry, after a 2016 report predicted lower corporate travel budgets due to global uncertainty and security concerns.