Travel industry forecast: is your next vacation about to get more expensive?

Find out what’s changing in airfare, transportation and accommodation with our cheat sheet into the latest travel industry predictions for 2017

Category Tips & tricks

Date 21st December 2016

Ever wanted to know the future before it happens? While we can’t pretend to be psychic, we can reveal the latest travel trends and predictions for 2017 based on leading industry research. If you’re curious about how fluctuating airfare and hotel rates will likely affect your upcoming travel plans, we’ve got the insider scoop for you.

We break down the key airline, hotel and ground transportation findings across every continent to show you the biggest travel projections for 2017 and beyond. These travel trends are based on the 2017 Industry Forecast by Advito, a leading travel consultancy firm specializing in corporate travel sourcing and expense and meetings management.

Europe

Thinking about a trip to London? Make sure to keep an eye on rising hotel prices
Thinking about a trip to London? Make sure to keep an eye on rising hotel prices

Budget savvy travelers rejoice! Despite recent economic and political concerns in the region, European travelers can expect a stable travel market and an increase in budget-friendly flights and accommodation. Many low cost carrier airlines (LCCs) will continue to offer attractive fares in the coming year, which has caused larger airlines to respond by increasing their efforts to grow their own LCCs, like Lufthansa’s Eurowings or KLM’s Transavia.

Interestingly, booking long-haul flights that stop in the Middle East or Istanbul is a much more cost effective way for Europeans to travel. This is because many European airlines are losing their share in the market to Middle East carriers who often operate newer, larger aircrafts that are able to carry more passengers at much lower fares.

Although hotel rates have climbed steadily in major cities like London, Amsterdam and Zurich, the good news is that more and more budget options are popping up, such as Ibis’s AccorHotels and Motel One.

North America

Miami Beach on the mind? Consider separate tickets rather than booking a multi-city flight
Miami Beach on the mind? Consider separate tickets rather than booking a multi-city flight

Flights across the US and Canada are testing out a “you get what you pay for” model. The “Big Three” (American, Delta and United) are competing with LCCs not only by replacing their old airplanes with newer, shinier versions, but also by introducing basic fares which don’t include seat assignment, free drinks or free itinerary changes. So long full can of Coca-Cola! The report also found that buying a multi-city ticket, like New York to Miami and then Miami to Los Angeles is generally more expensive than buying two separate flights.

While North American airlines continue to offer lower fares, hotel rates across the US on the other hand are expected to rise 5-6%. On top of that, more and more hotel chains are adopting new management strategies such as imposing resort fees as well as cancellation and change fees.

Latin America

Friends meet up along The Malecón, Havana's local hangout spot
Friends meet up along The Malecón, Havana’s local hangout spot

Cuba is the real Cinderella story. The island nation has seen an increase in foreign visitors this past year thanks in part to the twenty daily flights from the US. Six additional airlines are expected to win approval to fly to nine other Cuban cities as early as next year. On the opposite side of the spectrum, Brazil and Venezuela have not been as lucky. Both countries have seen demand for regional flights plummet due to economic and political issues. Business travelers will find it especially challenging to get to Venezuela, as many airlines plan to withdraw from the market.

Hotel demand is down as well, except in Colombia. While local hotel chains reign supreme in Latin America, international chains are expressing interest in the region so you can expect a few brand names to pop up in the near future. Existing hotels are taking note and updating their facilities by offering things such as improved Wi-Fi and new business centers.

Middle East

Several Middle East-based airlines are increasing routes to Asia and the US in 2017
Several Middle East-based airlines are increasing routes to Asia and the US in 2017

As long as travelers continue to feel confident about their safety in the Gulf States and surrounding areas, demand for accommodation in the Middle East will continue to grow, resulting in 2-4% hotel rate increase. While most of the hotels popping up fall under the luxury category, alternative accommodation such as shared housing and apartments are also attracting more and more business.

Up in the skies, Emirates, Qatar and Etihad continue to expand their fleets in Asia and in the US, so travelers can expect several more flight routes between the regions in 2017. At the moment, fares to Iran are especially high due to a heavy demand and limited options. However, fares are expected to drop as airlines begin to return to the market. British Airways and Air France have already begun flights to major cities like Tehran. Business travelers within the Middle East should expect to see slight increases in their airfare if they are travelling to another Middle Eastern destination or to the Southwest Pacific.

The first high speed train in Saudi Arabia is expected to launch in 2018, so visitors will have to wait one more year if they want an express ticket along the Mecca-Jeddah-Medina route. It is projected to carry over 50 million passengers each year.

Asia

Osaka's busy Dōtonbori district is a favourite among tourists
Osaka’s busy Dōtonbori district is a favourite among tourists

With leisure travel on the rise throughout Asia, direct flight routes are increasing. Airlines will also continue to keep fares low through heavy discounting and promotional fares simply to push prices down and consequently fill up more seats. The 5/20 law in India, which prevented airlines from launching international routes until they had operated for five years and had at least 20 aircraft, will be relaxed and travelers can expect fares to fall as these airlines expand overseas in the coming years.

Japan is the hotspot for international travelers, seeing not only an increase in foreign visitors, but also a 14% spike in hotel rates over the past year which is expected to continue. Similarly, hotel rates in Malaysia and the Philippines are expected to go up about 2-4%.

Compared to Europe and North America, local ride-hailing apps dominate Asia. Companies such as Didi Chuxing, Ola and Grab are gaining popularity and are available in over 30 major cities across the region. For those that prefer travelling by train, new high speed train routes can be expected to show up across China, Japan, Taiwan and South Korea.

Africa

There's no better way to see South Africa like a road trip throughout the entire country
There’s no better way to see South Africa like a road trip throughout the entire country

If you’re planning the ultimate holiday across several countries in Africa, be aware that flying within the continent will remain fairly expensive. This is due to limited services and several challenges such as high operating costs and over regulations for airlines. While fares are estimated to remain high, they are not projected to increase by more than 1%, if they do go up at all.

If you are looking for an alternative to flying, keep an eye on local Uber-like companies such as Taxify, Mondo Ride and Afro just to name a few. These apps are offering users lower fares coupled with better driver compensation in an effort to compete against the major players, mainly Uber. Car hire is easily available throughout South Africa making a road trip across the country a great option for adventure seekers; however, traditional car hire is not very popular outside South Africa and doesn’t show any signs of increasing.

Southwest Pacific

Surfers make their way down to Sydney's sandy Bondi Beach shores
Surfers make their way down to Sydney’s sandy Bondi Beach shores

With its sprawling cities, never-ending beaches and year-round warm weather, who wouldn’t want to explore every corner of Australia? Turns out, no one. Domestic flights across the country are fuller than ever and average ticket prices are rising ever so slightly. Hotel rates are back on the rise around 2-4% nationwide with rates in Sydney expected to go up even more compared to other cities. Speaking of Sydney, hotel occupancy rates have rarely fallen below 90% in the past year so if you are thinking about taking a trip to the land down under, it might be a good idea to book your accommodation well in advance. New Zealand can expect a similar trend, with hotel rates projected to go up around 4-6% across the country.

Chinese airlines are pressing on full steam ahead with new routes to both Australia and New Zealand and the competition among airlines is likely to result in lower airfares. Many of the new routes are from Tier 2 Chinese cities, think Xiamen to Melbourne and Chongqing to Auckland.

2017 is looking up to be another exciting year in travel. Low oil prices can almost guarantee that economy flight fares will stay flat in most global markets, and although hotel rates are expected to increase about 1-3% globally by 2017, at least they won’t go up by double digits.

Now that you know what you’re getting into for next year, go ahead and start planning that next trip. We’ll even help you with the packing and finding the perfect accommodation

Originally published

21st December 2016