Hotel and flight prices are expected to rise in the UK next year as the economy continues to improve, according to a study by Carlson Wagonlit Travel and the GBTA.
Overall business travel spending in the UK is set to rise by 5.1% in 2015, compared to an estimated rise of 4.4% during this year, according to the 2015 Global Travel Price Outlook.
The study said that hotels are likely to see the highest jump in rates in the UK with an overall price increase of 3.5% next year with London prices likely to go up by an even higher percentage due to “room shortages”.
This compares to an expected global increase in hotel prices of 2.6% in 2015 leading to an average daily rate of $179 per room.
CWT and GBTA said that hotels were likely to be in a “better negotiating position” than for several years in 2015 due to “stronger demand and investor interest, and favourable capital costs”.
“This improved outlook could lead to greater pressure on negotiated rates for travel managers and buyers,” said the report.
Airfares meanwhile are set to rise by 1% in the UK next year due to “price competition” from no-frills airlines such as Easyjet and Ryanair. This increase is significantly lower than the forecast global rise in airfares of 2.2% next year to an average ticket price of $771.
Better news for buyers is that ground transport costs in the UK are projected to fall slightly by 0.5% next year.
CWT and GBTA are forecasting an overall 8.6% global increase in spending in 2015 – up from an estimated rise of 6.9% this year – fuelled by higher demand from emerging markets such as China, India and Brazil, and improved economic growth in developed countries.
This higher demand is expected to outstrip planned increases in the supply of travel services which will help push up prices further.
Joseph Bates, vice president of research for the GBTA Foundation, said: “The study reveals that travel managers expect price increases next year across the board on travel categories including airfares, hotel room rates and rental car rates.
“Risks to the forecast including the escalating Ukrainian crisis, declining European inflation, burgeoning debt in China and oil price shocks could potentially have a negative influence on travel demand and pricing however, so travel managers are advised to consider contingencies for these risks in their planning.”