Hotel rates in North America and Africa won’t rise as much as previously forecast, according to the latest edition of travel consultancy Advito’s 2017 Industry Forecast.
In North America and Africa, the upper limit for the forecast range has been lowered, meaning prices should not rise as much as previously anticipated. In the Middle East, softer demand is coinciding with increasing supply. With rates now expected to decrease in Oman, Qatar, Saudi Arabia and the U.A.E., Advito changed its rate outlook for the region from a previously predicted rise of 2 percent to 4 percent to a drop of 3 percent to 1 percent.
Overall in the hotel sector, these revisions offset one another and the global rate outlook remains the same.
In terms of air travel, global demand continues to strengthen, with traffic growth hitting a 10-month high of 8.8 percent year-over-year in December 2016, according to the IATA. A pick-up in the economic cycle is supporting international air travel, although the performance of key domestic markets is mixed. The capacity growth that low oil prices encouraged has pushed down average fares in many markets. Airlines are trying to stabilize prices, and may soon resort to capacity adjustments to get some upward movement in pricing in 2017.
Notably, Advito lifted its prediction for regional business travel fare increases to 2 percent for North America and the Middle East. It also revised its outlook for Latin America intercontinental economy fares to a 1 percent decrease.
In the Middle East, per the original forecast, airline expansion will ensure that economy fares fall this year. Yet due to strengthening demand, Advito has adjusted its regional business fares forecast for this market, changing the predicted rise from 0 percent to 2 percent.
The outlook for the world economy is holding steady. A small improvement in the outlook for advanced economies has offset a downgrade in growth forecasts for some emerging markets. The original oil price assumption of US$50 per barrel has not changed.
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