Intercontinental airfares and global hotel rates in the first quarter of 2025 on average are projected to increase by less than 5 percent year over year, according to Advito’s quarterly Travel Price Index, released this week. Domestic airfares appear more volatile, according to the consultancy.
Average year-over-year intercontinental airfare increases, especially in business class, reflect what Advito called “a certain normalcy” in the market, following the sharp increases in the inflationary post-pandemic environment. Even as leisure demand weakens, the firm noted, surcharges applied on fares based on fuel, distribution channel or sustainability have helped increase the total cost.
Domestic fares in both economy and business class are more volatile by market, due in part to “supply chain constraints and aircraft grounding,” which will “impact domestic supply.”
Advito, the consulting arm of travel management company BCD Travel, calculated the Travel Price Index by using predictive analytics based on future shopping data.
Intercontinental airfares originating in North America are forecast to increase 4 percent year over year business class and drop 1 percent in economy class. Intercontinental fares originating in Europe are projected to rise 3 percent in both business and economy.
The firm projects the first-quarter global average daily hotel rate to increase 2 percent year over year, noting the “easing of leisure travel demand is driving softer cost increases in many markets,” according to Advito. First-quarter ADR is projected to increase 3 percent in in North America and 1 percent in Europe.
Advito projects car rental rates in the United States to increase 2 percent year over year in the first quarter. It noted that “on average, electric vehicles now make up less than 10 percent of” U.S. car rental companies’ fleets, adding “vast restructuring has been made to match current client needs.”
