Business travel costs to rise as carbon tax, mining boom weigh on airfare and hotel prices

Small business travellers should prepare – prices are about to rise and the carbon tax is partly to blame.

According to the latest Carlson Wagonlit Travel 2013 Travel Price forecast, flyers can expect airfares, hotel rates and car rental prices to increase over the next year, although the carbon tax is only one of many factors weighing in on the increased prices.

Air fares are expected to rise up to 1.5% in the second half of 2012, by up to 2.1% in the first half of 2013, and then by up to 2% in the second half of 2013.

“Specific charges to recoup this cost vary by airline and market, but a Carlson Wagonlit Travel (CWT) analysis has found it is causing an increase of about 1% in average ticket prices on domestic routes,” the new forecast found.

CWT senior director of Asia-Pacific Mike Orchard told SmartCompany the airfare increases are actually a positive finding.

“These increases are actually very moderate for domestic class fares, so they’ll stay relatively flat over the next 18 months.”

“One of the things that’s helping drive those prices up is the carbon price surcharge, and corporates can expect to pay going forward because of that. They’re going to be higher than they would be normally.”

However, Orchard says the increased competition among domestic carriers means the net increase is actually smaller than it would be otherwise.

The bigger rises will be kept to the hotel and car rental markets. Hotels are expected to see prices increase by 4.5% during the next six months, and then by 6.4% in the first half of 2013. Car rental prices are also expected to rise by 6.4% every six months through the end of 2013.

Orchard says the increases get worse when you break them down into cities. The mining-rich cities of Brisbane and Perth will be hit the worst, with increases of up to 8.6% and 11% respectively.

“We’re forecasting some big increases there,” Orchard says. “If you’re travelling to Perth and Brisbane you’re going to be exposed, and that’s obviously because of the high demand and the low capacity there.”

In comparison, Sydney is expected to see prices rise by just 5.7%, and Melbourne prices will rise by 5%.

But Orchard says there are a few ways businesses can save on travel costs, if they apply a few changes to their budget processes.

“One of the biggest ways you can save money is through advance bookings. Most corporates haven’t really embraced that, and something like a 14-day advance booking rule can really help them out.”

“Of course they won’t necessarily always achieve that because some people need to travel quickly, but if they do, we think they can achieve savings of up to 10%.”