BCD's Worldwide Air, Hotel & Meeting Venue Pricing Outlook for 2020

Business Travel News 9/19/2019

AAA World Article

The global average price for an intercontinental air ticket on both business class and economy class will rise 1 percent in 2020, according to BCD Travel's 2020 Industry Forecast. Global average daily rates for hotels will increase between 1 percent and 3 percent, as solid demand keeps occupancy rates high.

Airlines will face higher fuel and labor costs but reduced competition. At the same time, strong demand will continue, allowing airlines to increase average fares in most markets. Yet, expanding capacity will limit these increases.

To construct their estimates and projections, BCD Travel interviewed corporate travel and meetings management experts and analyzed historical corporate client transaction data through March 2019 for air and through April 2019 for hotel rates. In addition, it used historical macroeconomic and industry data through July 2019 from the International Air Transport Association, Oxford Economics, Tourism Economics, the International Monetary Fund, The Economist Intelligence Unit, Oanda Currency Converter, OAG, the U.S. Energy Information Administration and Cirium.

North America

In 2020, fares in the U.S. are most likely to rise 1 percent on both domestic and international routes, according to BCD. Despite a sharp rise over the past year, oil prices are still at a level at which airlines feel confident they'll turn profits. The 2020 presidential election is unlikely to impact demand. Ongoing U.S. trade disputes, however, could derail economic growth. Carriers will be able to respond quickly, though, by retiring old aircraft to adjust supply in line with demand, BCD expects. Carriers, confident about growth in 2020, are investing in new products like premium cabins, in hopes they will drive customers to upgrade. The U.S. Big Three will continue to expand their networks, but the grounding of the Boeing 737 Max may constrain American Airlines and potentially Southwest.

In Mexico, demand has been close to flat as businesses manage travel budgets tightly while waiting to see how the policies of new president Andres Manuel Lopez Obrador affect the economy. Meanwhile, supply has grown thanks to low-cost carriers like Interjet expanding capacity and increasing competition. Supply growth, coupled with wariness from businesses, pushed fares down this year, the report said. This situation will continue into 2020, causing fares to remain low.

LCC WestJet's expansion has made Canada's domestic market more competitive. Air Canada has significantly increased its international operations in recent years and built Toronto into an international hub. In 2020, strong demand will push fares to rise faster than in the U.S.

In the U.S., rates have not increased as fast as the strength of demand would suggest, the report said. Concerns about recent drops in the U.S.'s quarterly economic growth have helped limit price increases. In addition, an injection of supply for the second consecutive year also has mitigated high demand. Supply is set grow at a strong pace for a third and final year before tapering off in 2021. Demand is unlikely to expand much as economic concerns mount. Rates will rise between 2 and 4 percent if the economy remains strong but will not change if economic growth takes a hit.

In Mexico, rates will stay flat or rise as much as 2 percent as supply growth slows. In Canada, strong demand will push rates up again, by between 2 and 4 percent. BCD expects higher rate increases in Montreal and Vancouver.

Meeting and event venue rates will rise no more than 2 percent in the U.S. as demand outpaces supply, according to BCD. Rates will rise modestly in Mexico. Travel warnings have reduced demand from international conference organizers, but the domestic market is holding up.


Uncertainty around Brexit, growing tensions with Iran and the trade dispute between the U.S. and China pose threats to EMEA air travel demand. This uncertainty may make companies less inclined to invest, which means less travel. Carriers will trim capacity to align with demand, keeping fares stable or allowing them to rise slightly. If carriers are slow to respond, some localized, short-term price wars could occur, but large-scale fare decreases are unlikely, the report said. As it stands, BCD forecasts business class fares to rise 1 percent on intercontinental routes and 2 percent on regional flights. Economy fares are sure to stay flat, thanks to competition from LCCs.

In 2019, demand for hotels has been strong in most European countries. High occupancy has persuaded developers to build more hotels, mainly under the management of Accor, Marriott International, Hilton and InterContinental Hotels Group. This surge in hotel openings will continue into 2020. BCD expects demand to stay strong, pending geopolitical developments. The biggest rate increases will be between 3 and 5 percent: in Spain, Ireland and Luxembourg. Germany will see a rise between 2 and 4 percent, while rates in France and the U.K. will increase between 1 and 3 percent. Rates will rise faster for Parisian hotels.

Despite many new meetings venues across Europe, supply is not meeting demand. Demand is strongest in Germany and the U.K. but also solid in Belgium, Denmark and Sweden. In 2020, demand will remain robust and supply will fail to keep up, resulting in an increase between 3 and 4 percent, pending economic shock from Brexit or another geopolitical event.


Fares will rise 1 percent on intercontinental routes, while stronger demand will push regional fares up between 2 and 3 percent. LCC expansion in Asia will help offset steep fare increases expected for domestic travel in some of Asia's largest markets.

Demand will grow in China, especially on domestic routes, according to BCD, and China's main airports are operating close to capacity. These factors will help push fares up between 3 and 5 percent on average; double-digit increases are likely on the busiest routes. Fares on short-haul flights from China—especially to India, Malaysia and Indonesia—will rise because demand will exceed capacity.

Following Jet Airways' collapse, fares will rise between 7 and 8 percent in India and potentially increase as much as 10 percent if carriers cannot replace the lost capacity fully. Japan's domestic fares will rise between 3 and 5 percent, and international flights from the country could rise by as much as 10 percent, especially on some routes to North America and Europe.

Demand will outpace hotel supply across Asia. BCD expects a 2 to 4 percent average increase in hotel rates. The highest jumps will be in Japan and Vietnam.

In China, demand will be weaker than in the past. Supply growth will slow in Beijing, Shanghai, Guangzhou and Shenzhen but continue to grow fast in Chengdu, Xi'an, Quingdao and other second- and third-tier cities. Overall, ADR is unlikely to rise by more than 2 to 4 percent.

Rates in India will rise between 3 and 5 percent. In Japan, because of the upcoming 2020 Olympic Games in August, rates will rise between 4 and 6 percent.

In the meetings space, the limited increase in supply of venues and strong demand will send rates up between 4 and 5 percent.

Middle East

With airline costs likely to rise in the Middle East, business class fares within the region will rise by 1 percent and economy class by 2 percent. Capacity is likely to remain flat while demand will increase slightly. If disputes with Iran flare up, air traffic to the Middle East could be affected severely. Disruption to oil supplies would raise fuel prices, which ultimately contribute to higher airfares.

Hotel supply will grow substantially and demand modestly, as long as the situation in Iran does not escalate. Rates will climb between 1 and 3 percent on average, though they will decrease by the same range in Qatar if its political differences with neighbors continue. Rates for upscale hotels are likely to rise while midscale rates will stay the same.

Latin America

In 2020, there will be a small increase in business travel if most Latin American economies improve. Supply will increase thanks to LCC expansion. Regional fares will rise as much as 3 percent, but intercontinental fares will stay flat. BCD is watching for launches of more regional air services. Two issues will affect domestic air travel in Brazil: the progress of President Jair Bolsonaro's economic reforms and whether a carrier can fill the gap left by Avianca and thus restore competition in the region. Fares for international routes will rise if the Brazilian currency continues to devalue. Hotel rates will rise between zero and 2 percent if the economy improves.


Australia's economy stalled this year, as fears of recession rise. Because of the uncertainty, domestic fares will rise by no more than 1 percent, stay flat or fall by as much as 1 percent.

Hotel rates will grow between zero and 2 percent in 2020, thanks to more hotel openings. Sydney will see the strongest rate increases, while rates could fall in Perth.


The political direction of South Africa, which influences the economy of the continent, is a variable. If investor confidence in the government improves, the return of capital would galvanize business travel. Furthermore, because the U.K. is South African's largest European trading partner, a hard Brexit could have a negative ripple effect on the continent.

Demand for business travel will increase as the region's economic growth accelerates, according to BCD. Slightly higher fares will appear in fast-growing countries like Nigeria, Ghana and Cote d'Ivoire. Fares for intercontinental travel will rise 1 percent in business class but remain flat in economy.

Supply will continue to grow. Addis Ababa, Ethiopia, will attract significant development, especially as major brands like Hilton and Wyndham are scheduled to open properties there. The expanded supply will restrict hotel rate increases in 2020. BCD expects hotel rates across Africa to rise between 1 and 3 percent.

Other Articles

Frontier Airlines Updates Change Fee Policy

Some passengers will see a rise in change fee while others will see the fee eliminated. The move is aimed at encouraging passengers to purchase Frontier’s ‘WORKS’ bundle when booking their tickets.

Travel Risk Management: Small Steps Can Make a Big Difference

At the Global Business Travel Association conference in August, WorldAware's Bruce McIndoe walked a group of attendees through the essential process areas that achieve a "mature" risk management program.

International Airlines Join the FAA Ban on MacBook Pro Laptops

The FAA has banned certain MacBook Pro laptops that were recalled by Apple earlier this summer due to safety concerns with the lithium batteries that include risk of fire. Other international airlines have begun to take the bans a step further.