Latin America to Lead Business Travel Pricing Boost in 2012, CWT Says

Latin America to Lead Business Travel Pricing Boost in 2012, CWT Says
By James Shillinglaw

Carlson Wagonlit Travel (CWT), the business travel and meetings and events management, company, released its 2012 Travel Price Forecast projecting supplier prices for airlines, hotels, ground transportation providers, and meetings and events (M&E) spend. CWT’s analysis shows that prices in most geographic areas and for most categories of spend are expected to rise in 2012, with the most substantial increases occurring in the Latin America region.

“Travel buyers in most parts of the world are facing tough negotiations as the landscape increases in complexity,” said Nick Vournakis, vice president of CWT Solutions Group. “At the same time, economic uncertainty continues in some parts of the world and has resurfaced in others, prompting increasing questions on exactly what 2012 holds in store for organizations and, by extension, for business travel.”

According to CWT, the United States in 2012 will continue to struggle with high unemployment rates and ongoing effects of the housing crisis that originated during the economic downturn, while Canada’s economy has been and is expected to remain relatively stable.

CWT forecasts airline pricing in the North American market to increase by 3.5-4.1 percent in 2012, due to suppliers’ disciplined efforts to manage capacity even in the face of demand, ultimately resulting in fuller planes and rising prices overall. Average daily hotel rates in the U.S. will increase only modestly in 2012, with very limited growth in Canada. Rates also will vary widely across both countries based on geography and property type.

Overall, CWT forecasts a 2.4-3.1 percent increase in the first half of 2012 for the North American region, and a 2.6-3.4 percent increase during the second half of the year. The car rental business in the North American market is highly consolidated with intense competition for the business traveler, which forces suppliers to reduce or keep prices flat to retain corporate clients.

Given this, CWT is forecasting pricing to range from a 1 percent decrease to a 2.5 percent increase for 2012. M&E will continue its steady recovery throughout 2012, with a 1-4 percent increase in average group size for all meeting types, and a 5.5-6.5 percent increase in cost per attendee per day, due to strong demand and limited supply in related travel categories.

According to the CWT forecast, Latin America will experience some of the most substantial price increases of any region across the main areas of travel spend, although a closer look reveals disparate conditions by country, with some local economies prospering and others suffering from political uncertainty and economic instability.

CWT is forecasting that airline pricing will rise by roughly 5.8 percent in 2012, with increases in Colombia topping the charts at 7.9-11.4 percent. This is primarily due to rapidly increasing demand and limited supply in the region.

Average daily hotel rates during the first half of 2012 are expected to increase by 9-11.8 percent, and increase by 10.1-12.2 percent during the second half of the year. CWT said Brazil could see increases of more than 24 percent in the first half of 2012 and up to a 34 percent increase during the second half of 2012.