After posting sharp rises in 2019, prices in the global travel industry are likely to slow in 2020, according to the sixth annual Global Travel Forecast from CWT and GBTA. Airseats will see a modest 1.2 percent rise, hotel rates can expect a rise of only 1.3 percent, and rental car rates will rise 1 percent. So while the global economy is doing well overall and is expected to grow a solid 3.6 percent in 2020, a raft of uncertainties are set to put a damper on pricing.
"The risks and ambiguity have increased over the past few months - not least the threat of escalating trade wars, the impact of Brexit, possible oil supply shocks, and the growing likelihood of recession," said Kurt Ekert, CWT's President and CEO. "This forecast will help travel buyers make the right decisions in an increasingly challenging environment."
In North America, while the US economy is thriving, there is growing uncertainty, due to tariffs and trade wars. US GDP growth is predicted to slow to 2.1 percent in 2019, and slow further in 2020 and 2021, to 2 percent and 1.8 percent, respectively.
Air fares are expected to rise, reflecting the strong economies of the US and Canada. Most airlines are looking to ancillary fees as a way to stay competitive, so costs of services like WiFi and lounge access may be up for negotiation for corporate travelers.
The hotel industry has seen slow, but steady growth. A gradual slowing will help rates return to normal, correcting the high prices seen in some major cities. Technology-focused areas like San Francisco, San Jose, Seattle and Vancouver are still seeing growth. However, demand in these cities has been high for so long that prices have risen too far and business travelers are staying further out in response.
Due to the nature of long-term contracts, ground transportation is unlikely to see any upward trends in pricing until 2021 or 2022. Traveler preferences are dictating a change in car preferences, shifting away from traditional sedans in favor of more versatile SUVs and trucks.
Asia's expansion has slowed down due to worsening US-China relations, tighter global financial conditions, and natural disasters. But the region remains the most dynamic, with steady GDP growth, benign inflation, and a sense of optimism.
According to the International Monetary Fund, the EMEA region expects steady growth, ranging from 0.3 percent in the Middle East to 1.6 percent in Europe, and 3.6 percent in Africa. Across Europe, labor unrest, climate change protests, global trade wars, rising oil prices and regional terrorism all have the potential to cause a slowdown. Meanwhile in Latin America, economic activity continues to grow - albeit slower than anticipated - and is expected to rise 2.5 percent in 2020. A volatile political and economic situation in some of the largest economies like Argentina, Mexico and Brazil will hurt prospects.