Demand for business travel continues to be “high” in Europe this year despite increasing airfares and hotel rates, according to the latest analysis from FCM Consulting.
FCM said that corporate travel demand globally remained “strong despite mixed economic conditions” in the first quarter of 2023, with more travellers looking to book online and earlier to “secure options and book lower prices”.
The TMC found that international airfares in Europe rose by 8 per cent for business class and 14 per cent for economy seats in the first two months of 2023, compared with the same period in 2019.
Globally, airfares were up by an average of 18 per cent for business class to reach $2,280 and a 14 per cent rise for economy tickets ($506), as demand for flights around the world continues to rebound.
While flight prices were up across most routes and classes of travel compared with 2019, there were some exceptions with business class fares between New York and London dipping by 6 per cent in early 2023 compared with pre-Covid prices.
FCM said that worldwide demand for flights was set to reach 85.5 per cent of 2019’s passenger numbers during the whole of 2023, while global seat capacity is expected to be just 2.5 per cent lower than in 2019.
“After 2022 - a year of significant imbalance in supply and demand - 2023 air travel will stabilise, seeing added capacity in the first half of 2023 and airfares moderating
in the second half of 2023,” said the TMC in its update.
Hotel rates rising
Hotel prices are also rising across the world, according to FCM, with average corporate rates up by 19 per cent in Europe in the first quarter of 2023 compared with the final quarter of last year. This also represented a 7 per cent rise in prices over the first quarter of 2022.
Europe saw the third highest quarterly rise in hotel rates behind Asia, where there was a 26 per cent increase, and Middle East and Africa (+22 per cent).
FCM added that total global hotel occupancy for the first quarter reached 60.5 per cent, which was just 4 percentage points below the level achieved in Q1 of 2019.
Among major European destinations, Paris saw its hotel occupancy surpass 2019 levels in the first quarter at 101 per cent of pre-pandemic figures. Other major European cities have also rebounded in terms of filling their hotel rooms: Rome (99 per cent of 2019 occupancy), London (93 per cent), Madrid (90 per cent) and Berlin (84 per cent) in Q1.
According to FCM, London had the highest prices in Europe during Q1 of 2023 at $271 per night, followed by Paris ($263), Dublin ($230), Amsterdam ($225), Milan ($221), Brussels ($220) and Barcelona ($219).
The German cities of Berlin and Frankfurt saw the largest increase in average room rates between the final quarter of 2022 and the first quarter of 2023, with 68 per cent and 50 per cent rises respectively.
FCM also examined global car rental prices, which rose by 23 per cent year-on-year in the first quarter to reach an average of $51 per day. This included a 46 per cent rise in the EMEA region with daily rental rates up to an average of $74.
Car rental rates are set to stay at elevated levels throughout 2023 due to “increased supply chain costs and strong demand”, alongside “constrained” vehicle availability as rental firms struggle to replace their fleets and face delays in obtaining parts and repairs.