Business Travel Forecast Predicts Modest Price Gains in 2016

NEW YORK, N.Y.—The American Express Global Business Travel Forecast 2016, predicts ahotel prices will see modest gains in 2016, as a slowly-improving global economy and stronger demand outpace increases in supply. Global hotel performance is also expected to improve moderately in 2016, as limited increases in inventory fail to keep pace with the growing global appetite for travel. Overall, North America is expected to continue its momentum from 2015 and experience healthy rate increases, while Asia-Pacific and Europe will show moderate gains.

“While we expect modest increases in global travel prices heading into 2016, travel managers are operating in an era of new challenges and evolving disrupters,” said Caroline Strachan, vice president, consulting, American Express Global Business Travel. “In addition to handling tasks such as measurement and compliance, new factors such as the sharing economy and mobile booking channels are becoming increasingly popular for business travelers. In order to thrive in this digital era, travel managers need to be aware of and dynamically adapt to these forces across a variety of geographies.”

Increased demand and higher group travel are expected to drive strong rate increases for North American hotels in 2016. Overall, momentum from 2015’s strong rate performance is expected to carry on through 2016 as corporate travel managers continue to be challenged in negotiating aggressive discounts. Major U.S. cities, which are seeing higher occupancy levels, continue to be supported by robust corporate travel and group businesses. While a healthy pipeline of new construction is on the horizon, the impact from added inventory is not likely to appear until after 2016. In secondary markets, excess inventory will dampen price increases while competition for customers is pushing hotel brands to focus on property renovations. Across Canada, variability persists within each province, however, the country is expected to see more moderate price increases (2.5 percent) in 2016.

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While Latin America continues to face bouts of economic weakness and political uncertainty, hotel rates are likely to rise as a result of inflationary pressures heading into 2016. Due to its robust manufacturing outlook and solid domestic consumption, Mexico remains one of the strongest economies in Latin America and is poised to experience favorable growth next year. Peru and Colombia are also expected to see hotel prices rise in 2016 as relatively strong economies and political stability make them attractive destinations for business and leisure travelers.

In 2016, hotel rates across Europe are expected to experience moderate price increases, as Europe’s economy stabilizes and demand increases without much corresponding growth in inventory. Growth will generally be stronger in larger cities where the weaker euro is spurring increased tourism. In the Middle East and Africa, an increasing inventory of mid-range offerings will provide travelers with more affordable choices, but rates will still rise on stronger economics in 2016.