INSIGHTS
The era of increased demand, shrinking availability & budgets
Business travel is back, with global demand hitting a record high and jumping by 11% at the end of 2024. This surge is mostly thanks to strong performance from airline carriers in Europe and Asia-Pacific. Domestic travel followed suit, with a 3% increase year-on-year.
Meanwhile, airline ancillary fees crept in, which now make up around 32% of their income. Hotels are feeling it too, with occupancy already high and expected to rise even further in 2025, leading to fluctuations in rates around the world.
Rising demand meets last-minute decisions
Flexibility and personalisation have been calling the shots recently. More travellers are jumping online to book, keen to keep their options open, catch the best deals, and ensure their final choice works for them. The self-service nature of online booking has meant that advance booking days fluctuate across the globe. For example, air bookings in Australia happen about 25 days out from travel, but in China, they mainly occur the week of.
On average across the globe, however, our latest trend report found that bookings are made 22 days in advance, and over 60% of bookings happen online. For those who haven't fully embraced online bookings, the pattern shifts slightly, with recent FCM data showing that 51% of offline bookings are made within 0–7 days of the travel date.
While flexibility, self-service, and empowered business travel is a win for everyone, last-minute decision-making does often come at a cost:
Airlines and accommodation providers often charge premium rates for bookings made within seven days of travel.
High demand means fewer last-minute economy seats, forcing businesses into premium fare territory.
Last-minute bookings can overwhelm travellers and bookers, creating stress and inefficiencies that take their toll on operations.
Delayed bookings may result in fragmented itineraries, with travellers forced to make multiple connections or stay in less convenient spots.
Travellers who struggle to secure preferred suppliers and maintain compliance, can experience inconsistency and higher expenses.
The lack of availability can impact important meetings, causing disruptions or missed opportunities that affect business outcomes.
The capacity & cost conundrum
Demand is surging, but supply lags behind. FCM Consulting reports that business travel demand has surpassed pre-pandemic levels, with some markets exceeding expectations. Airlines are operating at 83% capacity globally, and hotels are nearly full at 65-70% occupancy. This capacity is driving up hotel prices, particularly in major business hubs and gateway cities where demand outpaces supply.
We’re seeing really strong travel demand reflected in airline passenger load factors at which are sitting at 83% and hotel occupancy in popular capital cities around the world at 65-70%. It was a busy 2024 and we don’t expect this to change much coming into 2025
– Felicity Burke, Head of Consulting APAC
While the past year saw stabilisation in airline pricing for many city pairs, across economy and business class, some routes managed to balance demand and price in favour of the consumer. However, volatile markets in the Middle East present ongoing cost considerations, and it is still early days for some regions, including the Asia Pacific and North America, which are likely to face ongoing fluctuations as we enter 2025.
Looking ahead
As travel programs adjust to this rising demand and limited supply, business travel faces some unpredictability. The good news, though, is that some notable wins are observed by FCM Consulting and that there are opportunities to navigate these challenges.
Economy airfares have dipped by USD 22 on average, and business class fares are down by USD 78. FCM Consulting forecasts an additional 38 million airline seats this year, offering hope for improved availability and more competitive pricing.
Create a proactive booking culture
Encourage early bookings with your travel policy or incentives. Educate travellers and stakeholders on the financial impact of last-minute bookings. Promote early planning for predictable trips to secure lower fares and better availability.
Engage a travel management company
A travel management company (TMC) can provide access to analytics, negotiated rates, and alternative options, especially when availability is tight.
Give your people the right tools
Adopt booking platforms that predict price trends, include ancillary fees, and suggest the best times and rates to book. Our auto-generated "Best Fare of Day " feature is popular with bookers and the Breakfast Plus programme is designed for travellers.
Remove the friction
Automate approvals to smooth out processes, reduce delays in finalising trips, and allow employees and bookers to lock in the best deals quicker.
Negotiate smarter deals
With the average traveller taking 4-6 trips per year, spending roughly $1600-$1800 per trip, pre-negotiated rates with select suppliers can help save money and secure availability during peak times.
Monitor market trends
Stay on top of global shifts. For example, in 2024, the average room rate trended up across all regions, but in Latin America it decreased. Use these insights to guide decisions on where your travellers are heading and when they should be planning their trips. Visit FCM Consulting Report: 2025 Business Travel Statistics, Trends & Forecasts to stay in the know.
Plan for alternatives
Peak travel periods are getting busier than ever. With an increase in airline seats forecast for early 2025, flexibility in travel dates and destinations can unlock savings and smoother journeys that stay within budget.
Category plans
Keep your category plan alive and review it regularly. Evaluate the travel industry, define clear metrics, and engage your TMC to drive success.
We recommend booking early and considering a shake up in supplier strategy to help reduce costs. Looking at alternative cities for meetings and events can also help keep your budget in check. As we move deeper into 2025, we're forecasting a 3.9% growth in airline seat availability in the first half of the year compared to 2024.
– Felicity Burke, Head of Consulting APAC.