'Hotel prices globally may rise 3.7%, airfares 2.6% in 2019'

Cost of travelling is likely to rise sharply in 2019 globally, with hotel prices expected to go up by 3.7 per cent and airfares by 2.6 per cent, driven by growing economy and rising oil prices, a report said today.

"Prices are expected to spike in many global markets even as inflation remains subdued," said Kurt Ekert, president and chief executive officer, Carlson Wagonlit Travel (CWT).

The fifth annual global travel forecast, published by CWT and Global Business Travel Association, with the support of the Carlson Family Foundation, said airfares are likely to become more costly due to rising oil prices, the competitive pressure from the shortage of pilots, potential trade wars, and increasing fare segmentation to improve yield.

The projections in the report are based on transaction data from CWT's global client portfolio, including anonymised client travel patterns, over the past seven years. It also includes key macroeconomic and per-country indicators, such as current and expected GDP growth, the consumer price index, unemployment rates and crude oil prices.

Airfares are likely to rise by 3.2 per cent in Asia Pacific next year, including 3.9 per cent in China, 7.5 per cent in New Zealand and 7.3 per cent in India, it said.

"We expect robust private consumption to continue to drive strong growth in India, despite the impact of demonetisation and the implementation of the goods and services tax beginning to fade," the report said.

The only exception in this region according to the report is Japan, where prices are likely drop 3.9 per cent due to the country's added capacity in preparation for the Olympic Games in 2020.

In western Europe, the airfares are likely to rise by 4.8 per cent, with the increase pronounced in countries like Norway (11.5 per cent), Germany (7.3 per cent), France (6.9 per cent) and Spain (6.7 per cent).

Eastern Europe and the Middle East and African countries, on the other hand, will experience a decline of 2.3 per cent and 2 per cent, respectively.

Meanwhile, the hotel outlook for the next year is driven by the overall increase in air travel, which will fuel demand for rooms.

In Asia Pacific, hotel prices are likely to rise by 5.1 per cent, with New Zealand clocking a 11.8 per cent rise.

However, in Japan, prices are expected to fall by 3.2 per cent in 2019.

For ground transportation, including on-demand, shared, electric, and connected cars, rates are likely to stay flat in the Asia Pacific.

New Zealand is expected to whiteness a 4 per cent rise, while in India, the rates will go up by 2.7 per cent and Australia by 2.4 per cent.

Prices in Europe, the Middle East and Africa are also expected to remain flat overall.

However, countries like Finland, France, Germany, Italy and Spain are expected to see over 4 per cent rise in cost of ground transportation, while Denmark and the UK may witness 3 per cent and 2 per cent rise, respectively.