Average airfares are set to decrease globally in 2024 as the recovery loses “upward momentum,” according to a new BCD Travel forecast, which also projects global hotel rates to increase from 2023 levels.
It’s part of a 2024 global travel industry outlook that is “complex,” according to the travel management company’s Travel Market Report, released Thursday.
According to BCD Travel, the broad “uncertainty” shrouding its 2024 outlook—which includes geopolitical issues and “persistent” high interest rates—will have “direct implications” for air travel and pricing next year. Russia’s invasion of Ukraine, increased tensions over Taiwan and conflict in the Middle East have impacted air travel in 2023 and could continue to do so next year, according to BCD.
BCD also cited supply chain issues, increased fuel and labor costs and varying global travel demand as additional pressures on the airline industry in 2024.
“Airlines will do all they can to shield themselves from such uncertainties and challenges. Thanks to the sophistication of their revenue management systems, they possess the power to manage their inventory and pricing like at no other time in their history,” according to BCD Travel.
BCD Travel projects global average ticket prices to fall by 0.8 percent year over year in 2024. Regional fares are forecast to fall by 0.9 percent and intercontinental fares by 0.5 percent.
“Asia, Europe, Latin America and Southwest Pacific can expect to see ATPs fall by more than 2 percent,” according to BCD. “Higher average airfares are only likely in Africa and North America, but the increase in ATPs in these two markets looks set to be less than 1 percent,” according to the forecast.
Average fares in 2023 were 3 percent to 6 percent below 2019 levels, according to BCD.
Hotel Outlook
BCD projects average global hotel rates to increase by 6.8 percent year over year in 2024, according to the forecast.
“Even as the pace of the recovery shows some signs of slowing, demand should continue to outpace available supply in many markets,” according to BCD. And while hotel development and conversion pipelines have been robust across the globe, those will “take time to come online,” according to BCD.
To that end, hotels have shifted their focus from pushing occupancy to raising revenue per available room and average daily rate, according to BCD.
“Instead of trying to fill every room, hotels seem more prepared to accept lower occupancy, limiting availability and then holding out for higher rates,” according to BCD, adding the shift in focus could benefit hotels’ bottom lines through lower housekeeping costs.
BCD forecasts 2024 ADR in the U.S. to increase 4.3 percent year over year, while it increases 6.5 percent in Canada and 8 percent in Mexico.
In Europe, BCD forecast ADR to increase 7 percent year over year, while it increases 8.2 percent in Latin America, 6.3 percent in Asia, 5.2 percent in Africa and 3.1 percent in the Southwest Pacific, including Australia.
BCD projected 2024 ADR in the Middle East to rise 14.4 percent year over year. Expected gains in this region are primarily driven by high expectations in Turkey, according to BCD.
