As business travel demand continues to increase, so too has the cost of flights and accommodation, with notable price hikes across the UK and Europe, according to the latest report by FCM’s consulting arm.
The travel management company’s Q2 2023 trend report, released on Thursday (21 September), highlighted that global demand – and cost – of business travel is now higher than pre-pandemic levels.
In Europe, economy class air fares have risen 17 per cent compared to the same period in 2019, and business class fares have increased by 15 per cent, according to the report, which compared domestic and international airfares between January and May 2023 with the same period in 2019.
The largest rate increases globally were clocked in Latin America with a 25 per cent increase in economy fares, and in the Middle East with a 29 per cent rise in business class ticket prices. The global airfare average for both classes is up by 18 per cent.
Popular routes to and from London Heathrow saw some of the highest rates of price inflation in the region, including Dublin to London Heathrow, which saw an average 12 per cent increase in economy rates and a 26 per cent rise in business class fares compared to 2019.
Fares from London Heathrow to Madrid saw rate rises of 12 per cent (economy) and 7 per cent (business), while economy fares to New York JFK from the London hub increased 12 per cent, yet business class prices dropped by 7 per cent.
Commenting on the rate rises, FCM managing director for the UK, Ireland and the Netherlands, Andy Hegley, said: “Our insights show us the causes are due to a mix of global inflation, reduced capacity, higher operating costs and pent-up demand. Add in the current price of jet fuel and it all adds up.
“Our data experts at FCM Consulting found aviation fuel prices have shifted from $94 to $103 per barrel with the European summer demand, and the strengthening of travel to/from Asia. It’s estimated the pricing average will rise again to $119 per barrel as Asia travel demand grows throughout the rest of 2023,” Hegley added.
As for accommodation, the report highlighted huge price increases throughout 2023.
Average room rates (ARR) in Europe saw the highest increase globally between Q1 2023 and Q2 2023. ARR in Europe increased 12 per cent – approximately $24 – throughout the first half of the year, while ARR in North America and Latin America saw increases of 5 per cent and 3 per cent, respectively. Meanwhile, Asia and MEA saw rates drop by 2 per cent and 19 per cent, respectively.
Year-on-year demand for hotel rooms has also increased by almost 40 per cent, according to Hegley.
“Following the global situation over past few years, it was inevitable for demand to exceed all expectations – which, of course, will always bring prices up,” he said.