Strong Global Economy Means Higher Travel Prices

Jul 29, 2017
News

Travelers should expect to pay more for vacations beginning next year. A strong global economy is boosting prices in air, hotel and ground transportation due to high oil prices and rising inflation. Forecasters predict prices will increase as much as 4 percent in some sectors in the upcoming year.

The 2018 Global Travel Forecast, compiled by Carlson Wagonlit Travel and the GBTA Foundation, noted air travel could increase 3.5 percent and hotel prices 3.7 percent. Ground transportation was only forecast to increase 1.6 percent, less than the price of inflation.

“The higher pricing is a reflection of the stronger economy and growing demand,” said Kurt Ekert, president and chief executive officer, 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.”

Driving the increase in air prices is a rise in the price of crude oil and increased segmentation of base fares. The increases won’t be equal across the board, however. Asia Pacific will see an airfare rise of 2.8 percent, while air travel is expected to increase 5.5 percent in Western Europe and 8.5 in Eastern Europe. The Middle East and Africa will see an increase of 3 percent, while Latin America will see a slight increase of just .03 percent. North America will see modest increases of 2.3 percent driven by stronger U.S. travel restrictions and increased competition in Canada.

Hotel prices will increase an average of 3.7 percent globally, with Asia Pacific seeing an increase of 3.5 percent; Eastern Europe 6.3 percent; and Western Europe 6.3 percent. Major increases will be seen in Russia when hosting the Summer World Cup in 2018. Rates are expected to be 12 percent or higher. Norway will also have a major rise of 14 percent. The Middle East and Africa will see a small increase of .6 percent and Latin America will increase by 1.2. A growing supply of accommodations will keep rates in North American down.

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