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TheStreet Open House

American Express Predicts Robust Increases In Business Travel Pricing In Select Markets In Latin America, Asia, And Eastern Europe In 2013

Americas Highlights

While only conservative increases in pricing are expected in North America (the U.S. and Canada), American Express Global Business Travel predicts Latin America’s strong economies and resulting consistent travel demand to likely result in robust price increases in that region in 2013.

In North America, despite uncertainty resulting from the upcoming U.S. presidential election and economic discord in Europe, steady trip demand and capacity discipline is expected to drive increases in business-class air fares of 1 – 3% for both short- and long-haul routes. Economy fares vary, with short-haul routes predicted to rise 2 – 4% and long-haul route pricing staying flat at (-1) – 2%. Although limited numbers of hotel rooms are expected to be added in 2013, moderate occupancy growth is nevertheless expected to drive increases of 2 – 7% in mid-range hotel rates and 4 – 9% in upper-range hotel rates. Increased competition is predicted to drive car rental rates down, although the average daily rate is expected to rise slightly due to some increases in ancillary fees.

Although foreign carriers have added capacity throughout Latin America, the consolidation of some of the regional carriers along with strong economies and consistent demand are predicted to contribute to healthy air fare increases in the region in 2013. American Express Global Business Travel predicts short-haul economy fares to rise 7 – 10%, long-haul economy fares to rise 5 – 8%, short-haul business fares to rise 3 – 6%, and long-haul business fares to rise 4 – 7%. While the hotel construction pipeline remains tight, continued economic growth and middle-class consumer demand are predicted to drive increases in overall hotel rates in the mid single digits. The majority of this growth is expected to come from Brazil and Argentina.

Europe, Middle East and Africa (EMEA) Highlights

The currency crisis surrounding the euro, austerity measures, and generally low growth expectations are predicted to drive only low single-digit air fare increases in EMEA in 2013. Those markets hardest hit by the euro zone crisis may even see declining fares. Spain, for example, is projected to experience decreases in long-haul economy fares of (-8) – (-5) %. There are outliers bucking the trend in the region, however, such as Russia (with long-haul economy fares projected to be up 5 – 7%) and Poland (up 3 – 5% for the same type of fare), which are distanced from the euro zone’s troubles. Similarly, South Africa is expected to see strong growth thanks to its positioning as the gateway to southern and western Africa and the natural resources based in those regions.

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