Travelers should expect to pay more for vacations beginning next year. A stronger global economy, higher oil prices and rising inflation are driving up costs across air travel, hotels and ground transportation. Forecasters predict price increases of up to around 4 percent in some sectors over the coming year.
The 2018 Global Travel Forecast, compiled by Carlson Wagonlit Travel and the GBTA Foundation, projects that airfares could rise about 3.5 percent and hotel rates about 3.7 percent globally. Ground transportation is expected to see a smaller average increase of roughly 1.6 percent, below the anticipated rate of inflation.
“The higher pricing is a reflection of the stronger economy and growing demand,” said Kurt Ekert, president and chief executive officer of Carlson Wagonlit Travel. “The global numbers from this forecast should be considered strong leading indicators of what 2018 will mean for global businesses, as we anticipate higher spending.”
Rising crude oil prices and wider segmentation of base fares are major factors pushing up airfares. Increases will vary by region: Asia Pacific is forecast to see airfares rise about 2.8 percent, Western Europe around 5.5 percent and Eastern Europe roughly 8.5 percent. The Middle East and Africa are expected to increase by about 3 percent, while Latin America is projected to see almost no change, near 0.03 percent. North America is forecast to experience a moderate rise of about 2.3 percent, influenced by regulatory changes in the U.S. and heightened competition in Canada.
Hotel pricing is also forecast to climb, with a global average increase near 3.7 percent. Regional hotel rate forecasts include approximately 3.5 percent for Asia Pacific, and around 6.3 percent for both Eastern and Western Europe. Certain markets will see sharper spikes: Russia is expected to experience significant rate increases tied to hosting the 2018 FIFA World Cup, with rates anticipated to climb by 12 percent or more, while Norway could see increases near 14 percent. The Middle East and Africa are projected to have modest hotel growth of about 0.6 percent, and Latin America around 1.2 percent. In North America, an expanding supply of accommodations is likely to help keep rate growth more restrained.
Overall, the forecast indicates that business and leisure travelers should plan for higher travel costs next year, though the extent of increases will differ by region and travel segment. Monitoring regional trends and booking strategies can help mitigate some of the impact of rising prices.