Resilient corporate demand, particularly in premium classes, and carriers' capacity discipline in the face of high fuel prices will work to keep fourth-quarter airfares elevated, according to a new analysis by travel consultancy Advito. Hotel rate inflation should cool, Advito noted, but markets will diverge considerably.
International business-class fares are projected to rise at least 5 per cent year on year in every area of the world, according to Advito, in some cases far beyond increases in economy-class fares.
"Premium cabins are likely to experience the greatest pricing pressure as corporate demand continues to outperform expectations, while economy fares should remain more stable in highly competitive short-haul markets," according to Advito multimodal managing consultant Lucila Rodaro, writing in Advito's Q4 Travel Price Index.
Carriers, meanwhile, remain capacity-disciplined amid elevated fuel prices, according to Rodaro, targeting pricier premium-class demand.
"Many international carriers have yet to fully restore long-haul capacity, while fleet availability and operational constraints continue to limit growth in key markets," Rodaro wrote. "As a result, airlines remain focused on profitability over expansion, carefully managing capacity and prioritising higher-yield traffic."
Advito projects international and domestic business-class fares to increase 6 per cent and 3 per cent year on year, respectively, in Europe, and 6 per cent and 5 per cent in North America.
Advito highlighted the outbound North America to Europe international market, Q4 business-class airfares on which it projects to increase 7 per cent year on year while economy fares increase 2 per cent. Calling the North Atlantic "one of the healthiest long-haul travel markets globally," Advito noted carriers "continue to report strong premium demand between major business hubs such as New York, London, Paris and Frankfurt, helping maintain strong yields and supporting higher average fares paid despite broader economic uncertainty."
Advito said it uses predictive analytics to produce airfare calculations based on fare availability for the fourth quarter in global distribution systems, using August searches.
Accommodation: considerable variance
Hotel pricing in fourth quarter, meanwhile, appears set to be all over the map, per Advito. While the consultancy projects an average global 3.9 per cent increase year on year in fourth-quarter average daily rate, that figure should vary considerably by location.
"Latin America and Southwest Pacific sit well above the global result, Europe remains firmly positive, and Asia and the Middle East move into negative territory," according to Advito. "For buyers, the geographic mix of travel will matter more than global headlines."
Across Europe, Advito projects Q4 ADR to increase 4.9 per cent year on year, with every country market included in the index demonstrating year-on-year rate increases.
Iceland (up 13.7 per cent) and Portugal (up 11.6 per cent) sit at the upper end, while “major” corporate travel markets such as Germany (up 2.6 per cent), France (up 4.6 per cent) and the UK (up 9.4 per cent) show “more measured growth”.
“The pattern suggests persistent rate resilience rather than a single demand spike, with limited supply in some destinations and overlapping business, event and leisure demand support in others,” Advito said.
In the US, the consultancy projects Q4 ADR to increase 2.9 per cent year on year, lower than the 5.8 per cent it projected for the third quarter. That said, it warned corporate buyers may find increases higher than its projected average.
"Rate growth is increasingly concentrated in upper-tier hotels where business transient and group demand remain strong," said Advito of the US. "Limited new supply could further amplify increases in corporate-heavy and convention markets."
Advito also noted that although it projects Q4 ADR in India to decrease 3.5 percent year over year, the corporate bids it is receiving for 2027 are trending 12 per cent to 15 per cent higher.
"With hotel demand and pricing fundamentals remaining strong, buyers should be cautious about interpreting Q4 softness as the start of a broader rate correction," the consultancy noted.
Advito said its hotel projections were based on predictive analytics around flexible best available rates available in GDSs and online travel agencies for the fourth quarter.
Variable rail and car growth
Advito suggested fourth-quarter rail prices generally would increase up to 4 per cent year on year in Europe amid strong demand and, in some markets, competition.
In the US, rail prices are forecast to increase 5 per cent year on year "with record ridership levels sustaining upward pressure on fares," though increasing capacity is helping to moderate rates.
Advito projects Q4 car rental rates to vary across Europe, with the UK and Spain expected to see the strongest increases, with rates up 5 per cent year on year.
Strong demand in France is also supporting higher rates (up 4 per cent), while Germany (up 3 per cent) and the Netherlands (up 2 per cent) are “benefiting from improved capacity conditions that are helping contain broader price increases”, according to Advito.