Local trends expected to be largest driver of business travel costs for
major Canadian cities
MARKHAM, ON, Dec. 2, 2013 /CNW/ - American Express has released the 10th installment of its Global Business Travel Forecast, designed to help
corporate travel executives better align their plans and policies to
maximize the strategic value of their business travel agreements and
investments. The Forecast looks at three key travel sectors - airfare,
hotel and ground transportation, and found that local influences within
Canada are playing a significant role in determining travel costs next
The study revealed that because of budget airlines expanding their
US-Canada transborder networks, significant declines in transborder
fares are anticipated next year for both the U.S. and Canada. According
to the Forecast, low-cost carriers are expected to introduce new
premium economy offerings that will likely provide more travelers with
an alternative to business class travel and international capacity is
increasing, which is all expected to contribute to lowering long haul
prices in 2014.
Additionally, carriers with business short haul and trans-border routes
are expected to also increase with more products, more capacity, and
more routes. In particular, some economy airlines are expected to make
new inroads to U.S. destinations while also expanding their fleets. The
anticipated growth in low-cost options should force larger airlines to
lower their costs in order to compete in this space.
CANADA 2014 AIRFARE FORECAST
-6% to -3%
-9% to -5%
-11% to -8%
-6% to -3%
-6% to -3%
-12% to -8%
Conversely, travel costs in the ground transportation and hotel sectors
are expected to rise. Prices are anticipated to climb by 1 to 1.5 per
cent in the ground transportation sector due to rising fleet cost and
consolidation, though this is tempered by increased competition. In the
hotel sector costs are expected to increase by 2.4 to 6.4 per cent (for
both mid-range and upper-range hotels), with local trends in Toronto,
Montreal, Quebec, Calgary and Vancouver fueling the rising hotel costs.
"With continued economic uncertainty moving into 2014 and some travel
costs on the rise, it is more important than ever for companies to
ensure their travel investments are allocated to support the
achievement of their overall business objectives," said Colin Temple,
Vice President & General Manager of Global Business Travel at American
With the potential for travel costs to reach into the hundreds of
millions of dollars for many companies next year, it's more important
than ever for companies to adequately plan and manage their travel
investments. Formulating an efficient and effective program that aligns
with senior leadership can help achieve business priorities to not only
help facilitate discussion, but help shift thinking from travel as an
expense line item to travel as an investment.
The Canadian hotel industry is defined by a few key cities, each of
which is unique in terms of its balance of corporate, event-based and
Toronto's hotel market is very strong and demand is high for all
segments, including the new luxury hotel supply, which has resulted in
3.4 per cent YOY growth YTD 2013. Higher growth projections are also
anticipated for 2014.
Montreal is North America's fourth largest centre in terms of aerospace
jobs and is home to several large international air transportation
organizations such as IATA, ICAO and SITA. Hotels enjoy a strong
contribution from both leisure and meeting business.
Calgary continues to grow as a services hub for the energy industry,
which is directly linked to the strong hotel performance. While in the
long term the U.S. plans to develop its energy independence,
potentially impacting oil prices and softening demand, in the near term
Calgary is facing a continued capacity crunch with new hotel
development limited to the airport business community and the
University of Calgary.
Although Vancouver is known for international commerce and trade, mining
and forestry, software development and biotechnology, hotel performance
is strongly influenced by tourism. Instead of being driven by GDP,
hotel prices are actually driven by seasonality and prices typically go
up from May through September because of an increased demand from
visitors by air and cruise ship arrivals.
Halifax is the largest city economy in Eastern Canada and continues to
do well. Two offshore exploration energy projects and new shipbuilding
contracts contribute to the predictions for respectable travel growth
in demand and prices.
Overall, North American business travelers can likely expect mixed price
changes across travel categories in 2014. With minor exceptions, North
American airfares are expected to decline in 2014 as a result of
heightened competition from low cost carriers, challenging unemployment
levels and corporate travel policies becoming more stringent. However,
pending consolidation among major U.S. airlines may offset these
Predicted hotel rates in North America are expected to climb by 3 to 6
percent; however, the predictions for individual cities are expected to
vary widely. Hotel prices in North America's main travel regions will
likely continue to grow, but it appears that secondary locations have
become saturated with supply and are expected to be more competitive.
As Latin America's larger economies slow down after a period of growth,
changes in airfare and hotel rates are likely to vary
country-to-country. Local economies in Argentina, Brazil and Chile are
expected to have the greatest impact on business travel costs in the
region in 2014.
Brazil is expected to continue to lead in occupancy levels, and in
preparation for a global sporting event taking place in 2014, may also
experience additional increases in hotel rates next year.
Europe, Middle East and Africa Region (EMEA)
Companies should expect to pay slightly more overall for business travel
in EMEA in 2014, as suppliers likely make adjustments across air, hotel
and ground transportation categories, all of which are expected to
remain relatively flat or experience slight increases in the region. In
response to more competition from a strengthening rail industry, which
is expected to improve its business class options, larger airlines are
expected to follow the model of low cost carriers.
Hotel rates are expected to increase in nearly all countries and
categories in 2014, resulting in an overall prediction of increases in
both mid-range and upper-range categories for EMEA.
Asia Pacific Region (APAC)
Driven by China's slower but stabilizing growth, APAC will likely see
rate increases across most categories. Individual country predictions
tend to be positive, as well; however, as is the case in other regions,
considerable variability across the region is expected.
Hotel rates across the APAC region are expected to see rate increases,
as the region continues to grow economically and supply is not expected
to outstrip demand in most locations. The exception is India, which
may experience slight declines.
For details on how to purchase the Forecast, which includes more
insights on airfares, hotel and car rental rates in regions throughout
the world, please visit https://businesstravel.americanexpress.com/global-business-travel-forecast/.
About American Express Canada
American Express in Canada operates as Amex Bank of Canada and Amex
Canada Inc. Both are wholly owned subsidiaries of the New York based
American Express Travel Related Services Company, Inc., the largest
operating unit of the American Express Company. Amex Bank of Canada is
the issuer of American Express charge and credit cards, with outstanding products like the American Express® Gold Rewards Card, the American Express® Platinum Card, and the American Express® AeroplanPlus® Gold Card. Amex Canada Inc. operates the Corporate Travel and
Travellers Cheques divisions in Canada. American Express opened its
first offices in Toronto and Hamilton in 1853 and now employs 3,700
Canadians coast-to-coast. For more information, visit AmericanExpress.ca or connect with us at Facebook.com/AmericanExpressCanada and YouTube.com/AmericanExpressCAD.
About the Global Business Travel Forecast 2014 and Methodology
This year marks the 10th anniversary of the American Express Global Business Travel Forecast,
which has evolved into a leading global perspective of business travel
industry designed to help corporate executives to better align their
plans and policies to maximize the strategic value of their business
The Forecast is a key deliverable of American Express Global Business
Consulting EXPERT INSIGHTS research practice, which also produces monthly industry
analysis, the Business Travel Monitor pricing index, and detailed
travel program best practices and benchmarking reports.
The Forecast is based on a number of primary data sources, including
proprietary data from the American Express Business Travel Monitor, the
American Express contracted rates database, aggregate transaction data,
and secondary data sources including Smith Travel Research (STR) Global
Hotel Reviews, Center for Asia Pacific Aviation (CAPA), Airline Weekly
and economic data projects from Economywatch.com.
With the 2013 transaction trends and expected global expenditure context
in hand, American Express Global Business Consulting subject matter
experts consider their recent front-line industry and contract
negotiation experiences to predict specific expected price changes by
country and region. This Forecast also takes care to make predictions
by fare type or classes of service for air and hotel as price changes
prove to differ within these variables. All ranges represent forecasted
year-over-year changes in negotiated business travel rates.
Although the forecasts and projections provided in the report are based
on information gathered from internal and external sources that
American Express Global Business Travel believes to be reliable, no
representation or warranty is made as to the accuracy of the forecasts
or projections made herein. In addition, actual changes in business
travel costs could vary significantly from forecasted data,
particularly as a result of unforeseen future political, economic,
and/or environmental events.
About American Express Global Business Travel
Positioned at the intersection of commerce and travel, American Express
Global Business Travel offers its customers a comprehensive network,
service dependability, and deep insight to help move people and
businesses forward. American Express Global Business Travel provides
leading travel solutions, integrated consulting services, proprietary
research, and end-to-end meetings and events capabilities. These
innovative offerings enable clients to optimize the return on their
travel and meetings investments. Learn more at
American Express Global Business Travel is part of one of the world's
largest travel agency networks with locations in 138 countries
SOURCE: American Express
For further information:
Kate Weersink, (416) 644-2241