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Lower oil prices and increased capacity keep airfares in check

Chicago, 23 June 2015 – Average economy airfares for both intercontinental and regional travel will fall in almost every region in 2015, according to travel consultancy Advito’s update to their annual Industry Forecast. Lower oil prices are encouraging airlines to grow capacity, but demand growth has not kept pace. Airlines have responded by making more lower priced seats available, meaning lower average fares for travelers.

On the hotel side, the U.S. market continues to see strong demand and subsequent rate increases. With softer demand in Europe, Advito downgraded rate expectations for France, Germany, the U.K. and some smaller markets.

Advito monitors changes in economic growth, inflation, travel demand and oil prices. Each quarter, it revises its annual Industry Forecast to reflect changes to the original air and hotel pricing predictions for the year.

The update and the original Advito 2015 Industry Forecast are available at Advito.com (in the Insights section under “White Papers”).

A few of the update’s key findings:

  • The strengthening of the U.S. dollar is holding back global economic recovery. This doesn’t bode well for U.S. exports and is damaging for a number of emerging markets that have large U.S. dollar debts. Weak Chinese growth is another concern for emerging markets.
  • Advito originally forecasted moderate air fare increases as demand was expected to grow more quickly than capacity in North America. In this update, Advito lowered the figures, as growing airline profits make it more difficult for them to justify increased published fares.
  • Recent stable oil prices may soon face downward pressure from the prospect of Iran re-entering the global market, weaker demand from China and the growing risks of a Greek debt default. Despite these issues, the U.S. Energy Information Administration (EIA) has maintained its forecast for Brent crude in 2015 at US$ 59 per barrel. As a result, Advito maintains its own assumption at US$ 65.
  • Advito made just 2 changes to the hotel average daily rate (ADR) regional forecasts. As demand remains weak in Europe, Advito predicts more subdued rate increases. Conversely, as demand in Australia proves stronger than expected, Advito raised its forecast for Southwest Pacific from 2-4% to 3-5%.

About Advito

Advito is the travel industry’s most progressive consultancy, enabling procurement leaders to modernize their approach to managing the travel and meetings spend category. Led by a unique team of multi-disciplinary experts and thought leaders, we work with both clients and suppliers to push the boundaries of traditional air and hotel sourcing and strategic meetings management for higher program returns. We provide advisory, procurement and outsourcing services in the area of corporate travel sourcing, expense and meetings management, along with RFP development and management; benchmarking and vendor management services. We minimize our clients’ travel spend and maximize their travel program value in a data-rich, consumer empowered world. Headquartered in Chicago, Advito operates in key business markets around the world. More about Advito

About BCD Travel

BCD Travel helps companies make the most of what they spend on travel. For travelers, this means keeping them safe and productive, and equipping them to make good choices on the road. For travel and procurement managers, it means advising them on how to grow the value of their travel program. For executives, we ensure that the travel program supports company objectives. In short, we help our clients travel smart and achieve more. We make this happen in 110 countries with more than 11,000 creative, committed and experienced people. And it’s how we maintain an industry-leading client-retention rate of 96%, with 2014 sales of US$ 24.2 billion. More about BCD Travel

About BCD Group

BCD Group is a market leader in the travel industry. The privately owned company was founded in 1975 by John Fentener van Vlissingen and consists of BCD Travel (global corporate travel management), Travix (online travel: CheapTickets, Vliegwinkel, BudgetAir, Flugladen and Vayama), Park ‘N Fly (off-airport parking) and joint ventures Parkmobile International (mobile parking applications) and AERTrade International (consolidating and fulfillment). BCD Group employs over 12,500 people and operates in 110 countries with total sales of US$ 25.6 billion, including US$ 10 billion in partner sales. More about BCD Group

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