Advito’s 2024 Q2 travel price index report

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Intercontinental economy fares from Europe are dropping, business class holds steady

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: Europe

Intercontinental economy fares from Europe to most destinations in North and South America, the Middle East and Asia are dropping, driven by strong capacity growth and increased competition between the airlines. Fares to China are significantly decreasing, due to a slowdown of economic activity combined with the reinstatement of international airline networks. Intercontinental business fares have not yet been impacted by overall lower forward bookings versus last year (particularly on the transatlantic sector). Airline yield management may open availability of entry fare inventories in the coming weeks.

While airfares have largely decreased year-over-year, we are seeing fares trend slightly upward versus last quarter on some routes. We can attribute this largely to seasonality, with winter being a low season for travel (globally from and to Europe). Moving in Q2, both demand and fares will increase.

We’re seeing hotel rates decrease across Europe versus last quarter, with most markets experiencing a downward trend compared to Q1 rates. The only markets with an increasing trend are Iceland, Norway, Luxembourg, Russia, and Sweden. Rates are still largely up year-over-year, but the increases have decelerated, attributed to leisure and business travel leveling off.

NDC: What you need to know

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 28% 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 (-4%) than American NDC fares.

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 Q2 2023 and Q2 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 Summer.

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 Europe.

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 second quarter of 2024. Now is the time to monitor upcoming savings opportunities. The slowdown in travel demand should relax the hard approach taken by some airlines on corporate contracting or, at least, open steering opportunities for better savings. 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 across 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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