EXPECT CREATIVE VALUE-ADDS

We saw a year-on-year increase of 12% in air fares immediately after the air bridge announcement but traveller confidence was knocked due to the speed at which Spain was removed from the ‘safe’ list and with rising cases across Asia, and now Europe.

As a result, we estimate fares are to fall by an average of 15% globally for the remainder of 2020 and early 2021. By the summer of 2021 we expect them to rise to between minus 10% and plus 10%, depending on the availability of a vaccine, as demand grows with pent-up demand for holidays, plus events and conferences.

For hotels, the financial crisis in the autumn of 2008 pretty much halted the hotel real estate market. Once hotel performance bottomed out in late 2009, hotel investors jumped in and by late 2010 and 2011 prices went above prerecession levels. So, I predict hotel rates will drop by 25% in 2020, 15% in 2021, and 5% in 2022 and then a recovery is expected in 2024 with rates up by 2%.

Some of these price drops will be masked by hotels in other ways as they try to stimulate demand by delivering value-adds. So we expect to see a mixture of Buy X nights, get Y Free, or hotels offering discounted or free food and beverage, and hotel passes where corporates could buy 30 rooms to be used over a period with a discount applied up front.

David Bishop, Commercial Director Gray Dawes Group, a member of Advantage Travel Partnership