Prices predicted to rise in emerging markets
In 2013, business travellers could see increased costs in Latin America, Asia and Eastern Europe as executives look for new opportunities in these emerging markets.
The American Express Global Business Travel Forecast 2013, released in October 2012, notes that economic growth from Argentina to Poland -- and the business people looking to capitalise on it -- will be the main driver for executive trips in 2013. As such, strong economies such as Brazil, India and Russia will see a peak in airfares cost, and hotel room rates will climb as road warriors check in to these countries in greater numbers.
“Airline capacity within these emerging markets simply can’t keep up with demand,” said Adam Knights, group marketing director at ATPI, a travel management company. “People travelling to and from these countries are growing exponentially, and with only so many business class seats, the lower-priced ones get snapped up early.”
American Express predicts that because of this, short-haul economy fares will rise by approximately 10% and long-haul economy fares will increase about 8% in Latin America. India is expected to see the greatest price increases in the Asia-Pacific region, of up to 8% for economy long-haul flights and Russia will see long-haul fares grow by up to 7%.
For executives travelling to these places, this could mean longer journeys due to the lack of reasonably priced seats on direct flights.
“Demand versus capacity is always the greatest driver of prices. The fact is, hotel room numbers are running to catch up as well,” explained Peter Nixon, commercial manager at Business Travel Direct, a travel management company. To add to this, the infrastructure in emerging markets often struggles to keep up with visitor growth. This includes road and rail links and quality business hotels in more remote locations.
“For those who aren’t used to travelling off the beaten path it can be quite a shock to the system when they’re looking to tap markets that might not be what people are used to back home,” Knights explained.
The advice from business travel agents is to plan as far in advance as possible. “Spend more time researching the journey, as the very cheapest flight may be tempting but it will often be very inconvenient,” said Martin Lumbye, a partner at the flight and hotel search engine, Momondo.
The only consolation is that global economic uncertainty – due to the fiscal crisis in Europe and the deceleration of growth in China in the last year – is expected to dampen demand for business travel in these economies and keep rates in mature markets, including China, relatively flat. “And in time, these emerging markets will mature and expand to accommodate business travellers, with more hotel chains opening up and flight routes launched,” Lumbye said.