Airfares and hotel rates for business travel are likely to continue to climb in 2025, but travel buyers also are seeing bigger opportunities for discounts in both categories, according to data published by Emburse Travel Analytics.
The data -- based on business travel booking data pulled from the Emburse system on Nov. 8 by Emburse Travel Analytics, formerly Tripbam Analytics -- showed negotiated airfares were up 5.4 percent year over year as of November, while market airfares were up 7.4 percent year over year. With the faster rate of increase for market airfares, the gap between market and negotiated fares increased to 16.3 percent, up 2 percentage points from November 2023, according to Emburse.
In a report accompanying the data, Emburse chief strategy officer Steve Reynolds said airlines will seek to raise airfares for business travel through 2025 as leisure travel declines, large companies increase business travel and issues with airline manufacturers constrain supply. However, airlines might be willing to work with buyers on discounts, particularly as American Airlines has reversed its position on corporate discounting, he said.
"They will be more aggressive in enticing corporate customers to come back," Reynolds said. "Competitors will counter with lower discounts to maintain market share gained in 2024. If possible, consider renegotiating your airline contracts this year rather than waiting until they reach term."
For hotels, market rates were up 5.4 percent on a 30-day average year over year, while rates booked for corporate travel increased 4.5 percent, according to Emburse. The discount rate in November for corporate rates was 22.6 percent -- compared with 5 percent to 10 percent discount rates seen in the years coming out of the Covid-19 pandemic. Reynolds said the company is recommending a target discount of 23 percent in hotel rate negotiations this year.
Among the largest increases have been in Chicago, London and Toronto, where rates were up between 12 percent and 14 percent year over year, according to the data. Some markets have seen rates decline, including Boston, Barcelona and Scottsdale, Ariz., where rates were down between 4 percent and 11 percent year over year.
Emburse projects hotel rates next year will be up 5 percent to 7 percent year over year in Europe and the U.S. in the first half of 2025 and then flatten out as inflation lowers and supply increases, with a large number of openings planned.