Airfares And Hotel Rates On The Rise

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Airfares and hotel rates are expected to increase for South Africans in 2017.

According to the 2017 Global Travel Price Outlook compiled by the Global Business Travel Association and Carlson Wagonlit Travel, SA airfares are expected to increase by 4,4% compared with a global increase of only 2.5%. Other African countries are expected to show decreases in airline prices, with Kenya expected to see a 5.8% drop and Nigeria a 6% decrease.

South African hotel rates are also expected to increase by 7%, whereas most other countries in the Middle East and Africa are expected to see a considerable drop in rates. Clifford Ross, CEO of the City Lodge Hotel Group, says the rest of the world simply doesn’t have the same inflation rates as South Africa.

“One needs to compare apples with apples.” He adds that inflation rates are near zero in most countries, but above 6% in South Africa. According to Ross, South Africa will not see a surge in hotel prices in the next year. “We expect rate increases to be in line with inflation, possibly inflation minus in the current economic climate in South Africa.”

Marcel Von Aulock, CEO of Tsogo Sun, says 7% can’t be considered a surge in rates when inflation is around 6%. “The local industry is still well below long-term occupancy trends so there should be some recovery. However, it’s not boom time by any means.” Ross adds, “Prices will only ‘surge’ if all the stars align. Demand needs to increase significantly, no new room capacity coming into the market, inflationary considerations, good economic growth, and a positive financial outlook for the country… or the industry will still be playing rate catch-up, since the 2008 halcyon years when rates in South Africa were keeping pace with the rest of the world.”

The report also states that ancillary fees will have an increasing impact. In 2017, more corporate travel buyers will be looking for opportunities to leverage their consolidated data insights for better pricing on many of these fees. Jeanne Liu, GBTA Foundation vice president for Research, says although the outlook generally shows only marginal increases or flat travel prices, the high level of global uncertainty will mean that travel buyers and TMCs will need to remain on their toes. “The key to building successful travel programmes in 2017 will be watching and reacting to an ever-changing global landscape.”

Compiled by: Melissa Jane Cook. Source: Dorine Reinstein.