While airline, hotel and car rental rates are stabilizing, business travelers can expect to pay more to go on the road this year, according to the 2024 Altour Industry Forecast. Altour is one of the world’s largest travel management companies.

The “torrid” rate increases that business travelers experienced in 2022 and 2023 are expected to subside this year, according to the report. Leisure travel is returning to pre-pandemic levels, and the growth in capacity across all travel segments is beginning to meet or, in some cases, exceed demand forecasts.

Still, even with a degree of rate stabilization, the cost of taking a typical business trip will range from 9%-14% higher in 2024 compared with 2019, before the pandemic, according to the forecast. Among the findings:

Airlines:
There are already signs that capacity and demand are equaling out, which should lead to a small increase in airfares, or even a decline in some parts of the world. Domestic airfares are projected to rise from 2%-4% on a year-over-year basis. Major US carriers have continued to fortify their domestic hubs, improving the overall strength of their networks. In hub-related markets, fares could increase by more than 4% simply due to a carrier’s dominance.

Looking globally, prices could decrease on a year-over-year basis, driven by the decline in ticket prices in the Asia-Pacific region since 2023, when there was strong demand and limited flight capacity. In key driver markets, such as the US to Europe and Latin/South America, airfares are expected to increase in the range of 2%-5% year over year.

For businesses that renegotiated airline corporate sales agreements in 2023, the major takeaway was a reduction in discount offerings, particularly in domestic travel that touched airline hubs; and limited, if any, negotiating ability. The only area of leverage is with premium cabin international travel in competitive markets, which is highly coveted by airlines and comes with better discounts in return for increased market share. In some cases, this can be used to leverage better discounts for domestic travel.

Hotels:
The average daily hotel rate is projected to increase from 2%-5% on a year-over-year basis, a much slower pace than in 2022 and 2023. Still, the average daily rate in the US will be 21.3% higher than it was in 2019. For the 2024 rate season, Altour’s hotel consulting team is reporting an aggregate 2% year-over-year average daily rate increase across its customer base.

It’s important to note that there will be large fluctuations in rate changes depending on the city and type of hotel. For example, rates in cities like New York, London, Chicago, Los Angeles and Paris will see a year-over-year increase higher than the general rate forecast. These locations have a combination of business, meetings/events and leisure travel components that drive hotel rate increases. This is particularly the case with upper hotel tiers and “big box” properties.

Conversely, for lower-tier, limited-service properties, rate increases will be limited, because factors that drove this segment’s full return to pre-pandemic levels in 2022 are changing. The substantial increase in leisure or “revenge” travel is subsiding. As a result, this hotel segment will become more dependent on business travel in order to meet 2024 revenue projections. In fact, Altour’s hotel consulting team negotiated static rates with some hotels in this tier for 2024 that are 10% or lower compared with rates in 2023.

Car rental:
For business travelers who need to rent a car, the outlook is mixed. As supply-chain issues have subsided, the vehicle inventory has vastly improved. Still, travelers can expect to pay 3%-4% more in daily rental rates for 2024 on a year-over-year basis. Higher labor costs, the cost of acquiring vehicles and inflationary pressures will drive the rate increase.

Companies are continuing to expand their electric vehicle offerings, which will help business travelers comply with their corporate sustainability initiatives. But EVs are 25%-35% more expensive to rent than their gas-powered counterparts. This is certainly a consideration when balancing sustainability and budgets.

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