Advito’s 2024 Q1 travel price index report

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Intercontinental airfares are decreasing, hotel rates are up.

Even some of the most advanced algorithms will have trouble looking deep into the future to make accurate predictions. To combat this uncertainty when analyzing airfare and hotel rate trends, we’ve decided to produce a quarterly travel price index report for air and hotel.

Market snapshot: North America

We’re anticipating an overall decrease on intercontinental airfares from North America in Q1 2024, particularly to Asia. This is driven by a strong restart of airline operations to Asia (especially in China) and the Southwest Pacific. Abnormally high fares from last year are now back to normal. There is a small decrease in fares to Europe, but Brazil is driving an increase in fares to South America. Domestically, both business and economy class fares are only up by a couple percentage points when compared to Q1 of 2023, while economy fares are trending flat quarter-over-quarter.

In this quarter’s report, we also examine the competitiveness of American Airlines NDC (New Distribution Capability) fares vs. the competition (Delta Airlines and United Airlines). On US domestic routes, it’s no surprise that American NDC fares are on average 26% lower than American GDS (Global Distribution System) fares (lowest available main cabin economy fares). However, when comparing American Airlines NDC fares to Delta and United Airlines’ GDS fares on US domestic routes, the pricing gap is significantly lower. Delta and United GDS fares are even slightly more competitive (-3%) than American NDC fares. Download the excerpt report to review our recommendations on how to navigate these changes in your program.

What is an index?

As a quick reminder, it’s important to note that this report is not a forecast. A forecast uses published rates and fares, along with other socioeconomic data and world events to predict how rates and fares will change. This is an index. An index quantifies how published rates and fares are changing and avoids making predictions for long-term trends.

The Advito travel price index looks at actual, historical pricing data and compares it with future shopping data for the remainder of the quarter to analyze variance versus the previous period and the trend versus the previous quarter. Our first index was released in Q4 2022, and after a very positive response from clients looking to understand pricing trends in the short- to medium-term, we have produced similar reports for each quarter.

The full report (currently only available for Advito clients) features global trends, a breakdown of each region, as well as travel sector types. In the air analysis, we look at both business and economy class fares, as well as intercontinental and regional travel. In the hotel report, we’re analyzing the variance in average daily rates between Q1 2023 and Q1 2024, as well as the quarter-over-quarter trend. The result is a reliable report based on published airfares and hotel rates that does not make long-term predictions.

One of the most challenging parts of being a travel manager today is understanding how the constant change in the industry affects your program. Our air and hotel experts have used the travel price index to come up with some key focus areas for travel managers to address as we head into the Spring.

Download a short-form version of the report to get a sneak preview of our global analysis. In this quarter’s preview, we’re showcasing air and hotel pricing trends in North America.

Air program focus areas

There are several areas to focus on in your air program to ensure that it is set up for success heading into the first quarter of 2024. Now is the time to focus on cost avoidance and mitigate poor airline deals. Corporate travel buyers’ negotiating leverage with airlines is at risk and it’s becoming more difficult to secure deals. Now is the perfect time to reassess corporate travel policies and booking behavior to pinpoint areas for other savings opportunities. It’s also crucial to evaluate the value of NDC offerings to determine whether it makes sense to make the switch to NDC channels. Finally, don’t lose sight of sustainability. Assess your airline partners that encompass multiple factors like airline fleet efficiency, investments in sustainable aviation fuel (SAF), status of science-based sustainability targets, meaningful offsetting strategies, and other initiatives, both on the ground and on board.

Hotel program focus areas

In your managed hotel program, it’s time to assess the efficacy of the metrics you’re using to measure success. Look at metrics that are true indicators of good performance, like rate availability and average booked rate (ABR) to average negotiated rate (ANR) variance. On average, we find that between 30-60% of hotels are underperforming for our clients. So, before you head into your next sourcing engagement, think about the factors that make a property the best fit for your organization, and only include properties that meet those criteria. Adopt a multi-source content strategy to ensure your program is competitive and attractive to your travelers. And most importantly, utilize marketing strategies to engage with your business travelers so they adopt and advocate for your travel program.

Interested in the full Advito Travel Price Index Report? Reach out to your Consultant today. Not an Advito client? Get in touch with us, we’re ready to help you elevate your travel program.

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