DEMAND for business travel for 2013 will hold steady amid poor global economic conditions, but is unlikely to chart any significant growth, according to a recently updated forecast by Advito, BCD Travel's independent consulting unit.
Advito has based its predictions on the assumption that economic fears regarding the eurozone and China will not come true, though these concerns themselves will tame demand.
It expects the number of flights to grow in 2013, but by less than between 2010 and 1Q2012. Within the Asia-Pacific region, the report stated that Asia-based airlines would struggle to maintain profitable and deal with “the twin competitive threats of low-cost and Middle Eastern carriers”. Traditional Asian carriers were thus unlikely to increase capacity significantly.
Meanwhile, Advito has maintained its original forecast of moderate airfare increases in the coming year as a result of stable oil prices and strong demand relative to supply. Year-on-year increases will be smaller compared to over the last three years. Asia-Pacific, specifically, will see prices of air tickets climb four to five per cent due to expectations of strong long-term growth.
On the hotels front, demand is forecast to follow an upward trajectory in Asia-Pacific. On a global basis, the report said 2013 would likely see the “fiercest negotiations between hotel companies and their corporate clients” and hotels would see rate increases higher than 2012 although “not as much as they are looking for”. Limited new supply has created more of a seller’s market, but demand is still not as robust as suppliers would like, it explained.
Hoteliers looking for an eight to nine per cent rise in negotiated rates will have to settle for five to seven per cent instead, said the report.