GBTA: Fuel shock keeps business travel prices elevated

Global business travel prices are expected to remain elevated through the remainder of 2026 before beginning to moderate in 2027, with variations expected across regions, according to the Global Business Travel Association (GBTA) 2027 Global Business Travel Forecast. Pricing pressures are expected to ease gradually next year, but travel costs are unlikely to return to prior levels, as many of the forces driving higher prices have become long-term features of the industry rather than short-term disruptions. “Business travel remains a powerful indicator of business confidence. Companies continue to invest in face-to-face connections, customer relationships and growth despite higher costs and greater complexity,” said Suzanne Neufang, CEO of GBTA. “Business travel may need to weather more uncertainty through this year. In this environment, a well-managed travel program is essential. Realising travel’s full value will depend on managed programs backed by strategic foresight, data and decision-making.” The association identifies energy prices and labor costs as the two most significant forces shaping business travel pricing. The 2026 closure of the Strait of Hormuz triggered the largest oil supply disruption on record, driving a sharp increase in crude oil and jet fuel prices and impacting airline operating costs worldwide. Although fuel prices have retreated from peak levels, labor costs continue to rise across airlines, hotels, ground transportation and events and meeting providers through multi-year agreements, wage inflation, and ongoing workforce shortages. Air travel remains the most volatile category in the forecast, reflecting continued exposure to fuel costs, aircraft shortages, labor expenses and premium-cabin constraints. On average, global airfare is forecast to reach $756, up 4.7% versus 2025. Economy fares are projected to rise 8.7% in 2026 to $536. Premium fares (e.g. premium economy, business class and first class) are expected to increase 9.5% to $4,488, reflecting ongoing pressure on long-haul and premium travel markets. In 2027, airfare increases are expected to slow to 1.5% for overall fares, 1.1% for economy fares and 2.2% for premium. North America and EMEA are expected to experience some of the strongest average airfare increases in 2026, driven by capacity constraints, higher operating costs and ongoing aircraft delivery delays. In contrast, Latin America is seeing capacity grow alongside demand, helping moderate airfare increases relative to other regions. Global hotel average daily rates (ADR) are expected to increase 3.7% in 2026 to $168, followed by a more moderate 1.8% increase in 2027 to $171. While demand remains robust, a record global hotel construction pipeline is helping contain rate growth. Regional variation remains significant for 2026, with Latin America (9.5%) expected to record the strongest hotel pricing growth as demand outpaces new hotel development. This is followed by APAC (5%), which continues to benefit from strong demand recovery in key markets, and NORAM (3.2%). EMEA (0.6%) remains the most stable hotel market in the forecast, driven by softer demand. Car rental, the largest component of managed ground transportation, saw rates decline in 2025. Average rates are forecast to increase 3.6% in 2026 to $46.50 per day before dropping 0.9% in 2027 to $46.10. Among global regions, APAC rates in 2026 are expected to be highest at $57.70 per day, up 4.0%. Fleet availability and vehicle supply are stabilising, helping moderate pricing pressure across most regions. Meetings and events budgets are expected to increase through 2026 and 2027. While negotiated group hotel rates remain relatively stable, food and beverage, production and labor costs continue to put pressure on program budgets. Cost per attendee per day is forecast to increase approximately 3.0% to $263 in 2026 and 1.5% to $267 in 2027. Food and beverage and production expenses remain the primary drivers of meeting cost inflation. While travel cost growth is expected to moderate in 2027, prices are unlikely to return to 2025 levels. Structural factors including aircraft delivery delays, sustainable aviation fuel (SAF) requirements, labor shortages and geopolitical uncertainty are expected to result in a more costly travel environment. The forecast also highlights significant regional and category differences, underscoring the need for more targeted travel planning. Rather than relying on global averages, travel buyers should evaluate costs by region, market and category, as pricing drivers vary considerably around the world. High fuel costs could leave more planes grounded analyst warns European and US airlines could remove more frequencies in the winter and ground more aircraft than usual as high fuel costs make weaker services uneconomic, aviation analyst John Strickland has warned. Strickland, who heads up JLS Consulting, made the prediction during a World Aviation Fesitval webinar. “No matter how much airlines reduced prices to stimulate demand, they still wouldn’t be covering the cost of the higher price of fuel. And I think we’ll see more planes on the ground as a result,” he said. Airlines normally operate fewer flights during the winter, when weaker demand can leave them with spare capacity. They also typically use lower fares to stimulate bookings. However, Strickland believes high fuel costs will make it more difficult for carriers to justify operating marginal services this year. “I think what we’ll see this winter is a higher level of cancellations,” he said. “I don’t see airlines suddenly cutting prices left, right, and centre in order to stimulate demand.” He also stressed that some markets and cabin classes have already seen greater price increases than others, while individual airlines’ exposure varies according to their hedging strategies and ability to pass additional costs on to passengers. The warning comes as the International Air Transport Association (IATA) forecasts that fuel costs will rise by nearly 40% to $350 billion in 2026, with fuel accounting for 31.4% of total operating expenses. Despite the pressure, Strickland said airlines had so far prevented the crisis from developing into the immediate supply breakdown some initially feared, with many carriers finding alternative sources of fuel or using hedging strategies to shield themselves from the full extent of short-term price increases. According to Strickland, the number of services removed from schedules has so far been relatively modest. However, he expects these decisions to become more difficult as the industry moves beyond the peak summer period. Airlines are continuously assessing booking levels and individual route performance to determine which frequencies remain viable. For Editorial Inquiries Contact: Editor Matt Driskill at [email protected] For Advertising Inquiries Contact: Head of Sales Sally Passey at [email protected]