Why is the Cost of Travel Rising? How Can I Avoid Paying More?
At this point we’ve all went to price out an upcoming trip only to find the number on the screen is a lot bigger than we were expecting. You might be thinking: “But my trip last year was half the price!” or “I’ve stayed at that hotel dozens of times, it’s never cost that much.”
While there are many complex reasons why the cost of nearly everything is increasing, there are a few specific to travel that are worth understanding and how they affect your bottom dollar.
- Fuel Prices are Rising
This comes as no surprise to us since the value of fuel affects most aspects of our lives. Just like the prices at the grocery store increase due to higher costs for freighting, the same applies to travel.
Concerning flights specifically, the price of jet fuel has already increased about 50% this year which is the highest we’ve seen in over a decade. Analysts have predicted a 4 month delay for fares to catch up to these rising costs. With that in mind we can likely expect to see prices continue climbing through the first half of 2022.
- There is a Pent Up Leisure Demand
After many long months of lockdowns and tight restrictions, it’s safe to say the majority of us want to get the heck out of the house and see more than just the view from our living room. Whether it’s visiting family out on the coast or finally booking that dream trip to Spain, people are going places this year.
Up to 70% of leisure travellers across the globe have stated they are willing to spend more on their vacations this year, this will in turn affect those who need to travel for work. The age old balance of supply and demand will come into play heavily here.
- Many Cancelled Routes Haven’t Been Reinstated
If you or your employees frequent those “middle of nowhere”, rural destinations then you will likely continue to see higher fares. Not so much due to leisure travellers but rather as a result of route suspensions not yet being lifted. In fact, further schedule adjustments were just announced at the end of December, so that, coupled with increased fuel pricing, will mean more stopovers in addition to higher ticket costs.
Those looking to return to international business travel, though, will be eager to see many airlines now reinstating previously suspended routes.
- Higher Targets to Make Up for Lost Time
Every area of the travel industry was seriously affected by the COVID-19 pandemic. With seemingly the worst of it behind us, everyone is looking to move back into the green.
Along with the above factors, this too will shape pricing for most travel related products. Nightly hotel rates, for example, are forecasted to continue climbing up roughly 23% through to the end of 2023. The industry expects hotel increases to somewhat lead the charge as they look to regain lost revenues.
While ground transportation costs, such as rental vehicles, are predicted to only rise by about 7% through 2023 there is still the challenge with limited supply of new vehicles.
With these factors in mind, you’re now likely thinking “how can I mitigate the increased cost of travel for our company?”
Our team at Elite has a few suggestions to get you started.
- Book Further in Advance Where Possible
We understand business travel is never set in stone, but since the industry is forecasting costs to continue rising through the year, you’re more likely to capture lower pricing the further out you book. In general, as well, prices rise the closer you get to your travel dates.
We always recommend booking options with greater flexibility so if you do need to adjust, it comes with a smaller price tag.
- Review Your Company Travel Budget
Just like with your personal budget, if you only allot $100 a month for your groceries but are actually paying $400, you’re going to feel as though you’re falling behind.
Now that we are nearing the end of Q1 in 2022, it is a great time to revisit your quarterly or annual budget for employee travel to ensure you’re accurately in line with the current climate.
- Partner with a Travel Management Company
Whether you halted exploring this service through the pandemic or haven’t thought of it before, now is the perfect time to begin.
With greater access to airline contracts, increased buying power with hotel properties and unmatched rental supplier relationships, Elite Travel Management will bring great value to your travel program. Regular reporting for increased visibility and implementing unique cost saving strategies is just the beginning.
While no one can really say when travel prices will actually begin to level out, realistically there will always be something happening in the world that has an affect – that’s just the way it is. But what we can do is prepare.
Do you have questions? Maybe you’re eager to get started. Let’s chat!