Relax - Asia-Pacific airfares seen rising 2.5 per cent in 2013

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SINGAPORE - Air ticket prices are projected to rise by a moderate 2.5 per cent in the Asia-Pacific region next year, thanks to the downward pressure exerted by low-cost carriers (LCCs).

Business travel specialist Carlson Wagonlit Travel's 2013 Travel Price Forecast also expects average daily hotel rates in the Asia-Pacific to increase about 3.5 per cent in 2013.

"Singapore will lead the way with an 8 per cent increase amid strong travel demand and lagging supply; meanwhile, prices in Hong Kong will also increase more than the regional average as clients shift from 4-5 crown properties to 3-crown," it noted.

CWT also projected that Asia-Pacific car rental rates will likely experience the highest inflation of anywhere in the world, with a 5.9 per cent increase in 2013.

Rates in Australia and New Zealand will perform quite strongly due to increased demand and more tightly managed fleets, it added.

Meetings & events spending will increase about 6 per cent while group sizes will decrease around 3.8 per cent as organisations attempt to mitigate rising supplier prices by holding a larger number of smaller meetings with fewer attendees and of shorter durations, CWT added.

"Price increases in 2013 will begin to level off in most regions throughout the world compared to what travel buyers experienced in 2012, as booming economies like Asia Pacific's begin to normalise, and as uncertainty remains in Europe," said Nick Vournakis, senior vice-president, Global Product Marketing and CWT Solutions Group.

"While slightly higher prices will be the reality again next year as demand for travel outpaces supply in most places, our forecast demonstrates there is still plenty travel buyers can do to watch costs and take care of travellers through other measures, including re-examining how they influence traveller behaviour."

CWT forecasts airline pricing in North America to increase by 2.8 per cent in 2013, while in Europe, Middle East and Africa (EMEA) the increase will be 2.5 per cent.

Average daily hotel rates will likely increase 3.2 per cent next year in North America, while in EMEA it will rise by 1.3 per cent, CWT added.

Meetings & events spending continues to grow in North America, with an average 4.8 per cent increase expected in cost per attendee per day, along with an average 6 per cent increase in group size.

EMEA high-speed rail rates will likely increase 4.3 per cent during 2013 as this mode of transportation continues to offer a competitive alternative to air travel in key markets.

Notably, increases of up to 9 per cent are expected in premium-class cabins, where corporate travellers typically ride to access free wireless Internet and other amenities.

In the EMEA region, meetings & events spending will rise less than in other regions, with one per cent increases expected in costs per attendee per day. As a result, there will be less pressure on EMEA- based organisations to reduce group sizes to offset higher prices, which will produce slight increases of about 3 per cent.

Two pricing scenarios exist in Latin America's air segment, says CWT.

"Countries with healthy economies like Brazil and Chile will experience solid price inflation, while countries with weaker economies like Argentina, Colombia, Mexico and Peru expect moderate decreases to only slight growth."

Due to that, CWT expects 2013 airline pricing in the region to rise 1.3 per cent overall.

Average daily hotel rates in Latin America will likely go up about 6.3 per cent in 2013, with Brazil seeing the largest increase in hotel rates.

In fact, Brazil is the only nation in CWT's 48-country forecast that is expected to see double-digit price increases next year.

CWT recommends various strategies to manage costs, including more careful and continuous travel inventory management; considering alternative ideas in the use of airlines (including low-cost carriers), hotels and ground transport; consolidating to a few preferred suppliers to get bulk discounts; concluding negotiations quickly where good deals are to be had; and staying focused on total cost.

It warned that suppliers will retain pricing power in 2013, and will remain strict in enforcing contractual commitments on travel buyers.

This article was first published in The Business Times.

Asia-Pacific airfares seen rising 2.5 per cent in 2013

By Ven Sreenivasan, The Business Times | Fri, Jul 27 2012

Singapore will lead the way with an 8 per cent increase amid strong travel demand and lagging supply.