While strong demand in Asia will support higher fares in 2019—particularly for regional business class travel, there are opportunities to reduce costs of accommodation and meeting space rental, according to corporate travel management company BCD Travel’s 2019 Industry Forecast.
Intercontinental airfare for both economy and business classes is expected to rise 1% while regional airfare for business class is estimated to increase 2% and economy class 1%, the report says.
In 2018, fares have risen by 3% so far because supply is not keeping up with demand, and limited fuel surchages have been introduced, BCD Travel noted, adding that air travel is growing faster in India than in any other major markets in the region.
In June 2018, the domestic market recorded its 46th consecutive month of double-digit annual growth in air traffic, with demand rising by 21% during the first six months of the year, the firm added.
Hong Kong and India to see bigger increases in hotel rates
While hotel rates in Asia will rise by 0% to 2% on average across the region, Hong Kong and India will see much bigger increases, BCD Travel pointed out.
Demand for hotel accommodation from both business and leisure travelers is increasing, thanks to the strong economic growth across Asia, the firm said.
CFOs: opportunities to save accommodation costs
On the supply side, the biggest expansion comes from mid-tier hotels, especially those by local players, according to the report.
As more mid-tier hotels open, more companies encourage executives to trade down a service category or two to achieve savings without compromising on service standards, the firm said.
In addition, the good news for CFOs is that the younger generation of Asian business travelers is less interested in the status of staying in a luxury hotel, according to the report.
However, BCD Travel pointed out that managing corporate hotel spend remains a challenge as it’s difficult to use a single online booking tool across the region.
This makes it hard to create a consistent data picture for supplier negotiations, the firm added.
Cost of meeting space to remain stable
Supply of meeting space is growing fast in Asia—even faster than the healthy rise in demand, said BCD Travel, adding that Singapore, Hong Kong, Shanghai and most of India are exceptions where demand is rising faster.
In general, as more meeting space will open, there will be little change in pricing, according to the firm.
High-speed rail to become more popular among business travelers
While rail might not be a choice a business travelers in the past, this option makes sense with the availability of high-speed rail.
BCD said high-speed rail continues to expand in China and Japan, where it is drawing more passengers away from air travel.
In China, rail promises to become even more attractive for business travelers.
A new generation of Fuxing locomotives traveling at up to 350km/hour have reduced the journey time from Beijing to Shanghai by 40 minutes to four hours, according to the report, adding that travelers can stay connected on trains as Tencent helps China Rail introduce Wi-Fi coverage across its high-speed services.