According to the just-released 2018 Global Travel Forecast, a stable and strong global economy means travel prices are expected to rise sharply in the coming year, reaching nearly 4 percent increases in some sectors. This year’s report, the fourth annual forecast—it’s sponsored by the Washington, D.C.-based GBTA Foundation in partnership with Carlson Wagonlit Travel—also shows that, in 2018:
—Global airfares are expected to rise 3.5 percent;
—Hotel prices are expected to be 3.7 percent higher; and
—Ground transportation such as taxis, trains and buses are expected to rise only 0.6 percent—significantly less than the 3 percent inflation forecast for 2018.
We’ve gone through the report, and isolated those areas as they pertain to North America. The projections for 2018 follow.
2018 Air Projections: North America will see prices rise by a modest 2.3 percent, according to our projections. Citing the potential for stronger U.S. travel restrictions, flights to the United States have already been reduced accordingly. Canadian airlines are expected to aggressively compete given new market entrants and capacity growth of about 11 percent in 2017 and 12 percent in 2018. With the region’s air travel market nearly flat year-over-year in early 2017, competition is fierce between carriers who now compete on branded fares rather than on bundled fares or by carrier type.
2018 Hotel Projections: North American hoteliers may be banking on economic growth as demand has leveled off since mid-summer 2016 – but supply is expected to continue growing steadily through 2018. With international travel projected to grow 4 percent in 2017 and 2018, U.S. hotel growth is expected to be concentrated primarily along with the West Coast and in Washington D.C. In Canada, Toronto, Vancouver and Montreal are expected to maintain good pricing power amid a weak Canadian dollar.
2018 Ground Transportation Projections: Canada is expected to see a healthy 4.6 percent increase in 2018, but the overall region will only be up 1.0 percent. Limited railways, along with improved income per capita and increased corporate travel, are expected to push up rental car rates in North America. Still a low-margin business, rental car companies have implemented operational efficiencies and made investments in technology to better manage fleets and improve utilization. Sharing economies continue to grow, but face improved competition from traditional cabs and government regulation.
About the 2018 Forecast: Forecast projections provided by CWT Solutions Group. Data analysis provided by Rockport Analytics.