AmEx GBT forecasts hotel growth in 2018

NEW YORK — American Express GBT’s 2018 Business Travel Forecast highlights Canada’s strengthening economy and the positive impact this will have on hoteliers and the travel industry in key markets.

David Reimer, general manager and senior vice president, North America, at American Express Global Travel

David Reimer, general manager and senior vice president, North America, at American Express Global Travel

NEW YORK — American Express GBT’s 2018 Business Travel Forecast highlights Canada’s strengthening economy, and the positive impact this will have on hoteliers and the travel industry in key markets including Vancouver, Toronto, and Montreal. Overall, demand will continue to outpace supply.

Faced with the increasing
popularity of sharing economy options, the hotel industry has deployed
aggressive tactics to encourage more bookings. Whether it’s embracing dynamic
pricing structures, consolidation of smaller hotels into stronger brands, or
incentivizing customers with gift cards and loyalty rewards, the hotel industry
is rallying. American Express Global Business Travel’s 2018 Global Business
Travel Forecast analyzes how these efforts will pay off for hotels and the
travel industry as a whole.

In Canada, a
strengthening economy and still relatively weak Canadian dollar will continue
to draw U.S. visitors north of the border in 2018. This will have a particularly
positive impact on hoteliers in key leisure, meeting, and convention cities,
including Vancouver, Toronto, and Montreal.

Global Highlights

The outlook for international business travel is generally optimistic, according to the Global Business Travel Forecast 2018 published by American Express Global Business Travel (GBT). Demand is being driven by a steadily improving global economy and growing confidence among the business and investor communities.

Demand for business travel started to rebound last year, and is expected to grow over the next 12 months, with some notable gains expected in Europe and Asia. China and India’s high-powered economies once again lead the way. However, prices will see only marginal gains, as suppliers rapidly increase capacity to meet demand as they compete for market share.

Despite the recent economic progress made in many global marketplaces, an element of caution remains in some quarters. Geopolitical instability combined with moves by some governments towards more protectionist economic policies has generated an undercurrent of uncertainty in the business community.

Additional global highlights include:

Air: While strong demand is expected to drive airfare increases across all regions, overcapacity on certain routes, aggressive expansion by low-cost carriers (LCCs), and low oil prices will keep them in check. Full-service carriers are increasingly unbundling fares and adding premium economy seating options to entice consumers to better compete with LCCs.

Hotel: Hotel performance is expected to improve globally, with small to moderate rate increases driven by strengthening regional economies, despite robust investment in new hotel supply. Total costs, however, should increase even further as additional ancillary fees and stricter cancellation policies are applied by many hotels looking to bolster profitability.

Ground: After years of flat or negative growth, rental car rates should finally see increases as companies improve their fleet management while operating costs put pressure on pricing. However, competition will remain fierce. In the absence of significant rate increases, car rental companies are once again turning to ancillary services and fees to drive greater profitability.

David Reimer, general manager and senior vice president, North America, at American Express Global Travel believes these developments will allow travel managers to focus on the traveller experience rather than cost in 2018.

“In this time of economic rally, travel managers should aim to provide business travellers with the tools and services that will not only ensure satisfaction, but also encourage compliance and mitigate undue risks,” he said. “Business travel is a crucial driver of growth, and now is the opportunity to reaffirm commitment to it with more strategic and traveller-considerate planning.”

Canada benefits from U.S. uncertainty

In North America, U.S.
foreign policy will loom large in 2018, as foreign trade agreements are
renegotiated, potentially impacting international demand for travel. U.S. hoteliers will
contend with decreases in foreign travellers and overcapacity in many major
cities, with rates only expected to increase up to three percent on average
over last year. However, this will vary significantly by location and some
areas, like Silicon Valley, will continue to see rates climb. 

Canada will
benefit from this uncertainty, with demand — particularly from U.S. visitors —
largely outpacing supply in key locations such as Vancouver, Montreal and
Toronto, resulting in high single-digit rate increases. 

In Canada, hotel demand is expected to rise by 5.6 per cent in 2018, according to the Global Business Travel Forecast 2018.