Airfares and hotel rates for business travel are likely to
continue to climb in 2025, but travel buyers also are seeing bigger
opportunities for discounts in both categories, according to data published by
Emburse Travel Analytics.
The data—based on business travel booking data pulled from
the Emburse system on Nov. 8 by Emburse Travel Analytics, formerly
Tripbam Analytics—showed negotiated airfares were up 5.4 percent year over
year as of November, while market airfares were up 7.4 percent year over year.
With the faster rate of increase for market airfares, the gap between market
and negotiated fares increased to 16.3 percent, up 2 percentage points from
November 2023, according to Emburse.
In a report accompanying the data, Emburse chief strategy
officer Steve Reynolds said airlines will seek to raise airfares for business
travel through 2025 as leisure travel declines, large companies increase
business travel and issues with airline manufacturers constrain supply.
However, airlines might be willing to work with buyers on discounts,
particularly as American Airlines has
reversed its position on corporate discounting, he said.
“They will be more aggressive in enticing corporate
customers to come back,” Reynolds said. “Competitors will counter
with lower discounts to maintain market share gained in 2024. If possible,
consider renegotiating your airline contracts this year rather than waiting
until they reach term.”
For hotels, market rates were up 5.4 percent on a 30-day
average year over year, while rates booked for corporate travel increased 4.5
percent, according to Emburse. The discount rate in November for corporate
rates was 22.6 percent—compared with 5 percent to 10 percent discount rates
seen in the years coming out of the Covid-19 pandemic. Reynolds said the
company is recommending a target discount of 23 percent in hotel rate
negotiations this year.
Among the largest increases have been in Chicago, London and
Toronto, where rates were up between 12 percent and 14 percent year over year,
according to the data. Some markets have seen rates decline, including Boston,
Barcelona and Scottsdale, Ariz., where rates were down between 4 percent and 11
percent year over year.
Emburse projects hotel rates next year will be up 5 percent
to 7 percent year over year in Europe and the U.S. in the first half of 2025
and then flatten out as inflation lowers and supply increases, with a large
number of openings planned.
