In its latest global business travel analysis, FCM Travel reports that average corporate airfares for the first half of 2025 have decreased on a year-over-year basis, despite strong rebound and steadily rising demand. In sharp contrast, hotel rates continue their upward trajectory, presenting new budgeting and strategic challenges for managed travel programs across the corporate sector.

Declining Corporate Airfares Amid Strong Demand

Executives and travel managers have been surprised to see airfares decrease even as business travel volumes recover towards pre-pandemic levels. According to FCM and supporting data from the Global Business Travel Association (GBTA), global corporate airfares are averaging 3-5% below the same period in 2024, depending on market and class of service.

This downward trend can be attributed to several factors. Airlines have restored much of their international and domestic capacity following years of pandemic-induced cuts. The International Air Transport Association (IATA) projects global capacity will match or exceed 2019 levels by late 2025. Additionally, competitive pressures have driven airlines to hold or reduce fares, especially on key business routes in North America, Europe, and Asia-Pacific. New entrants, improved efficiencies, and lower fuel prices in early 2024 have also contributed to this phenomenon.

• Increased Competition: The return of low-cost carriers and the expansion of long-haul fleets by full-service airlines intensify pricing pressure, with corporate contracts offering more favorable terms.
• Flexible Booking Patterns: The persistence of blended travel and last-minute bookings has led airlines to adopt more dynamic pricing strategies to fill seats, particularly for managed corporate programs.

The fall in pricing comes even as business travel spending globally is projected to reach $1.57 trillion in 2024, surpassing pre-pandemic values, per GBTA’s 2023 Outlook. Markets in the U.S., India, and parts of Western Europe are among the most price-competitive.

Rising Hotel Rates Challenge Corporate Budgets

While airfares provide some financial relief for travel managers, upward pressure on hotel rates remains a significant concern. FCM, STR Global, and other hospitality analytics firms report that global average daily rates (ADR) for hotels are up 6-8% year-on-year across primary business destinations. Major markets such as London, New York, Singapore, and Sydney have all seen record-setting hotel pricing in the first half of 2024, a pattern expected to persist through 2025.

• Supply Constraints: Construction delays and renovation backlogs stemming from the pandemic have slowed the pace of new hotel openings, especially in urban centers.
• Increased Operating Costs: Labor shortages, higher wages, and energy prices have all driven up costs for hotels, which pass on expenses through higher rates.
• Robust Group and Event Demand: The rapid return of conferences, trade shows, and incentive travel has tightened availability at premium business properties, further inflating rates.

Despite these costs, corporate travelers continue to demand additional amenities and flexibility, resulting in further price escalation—especially for flexible bookings and premium categories. According to Amex GBT’s 2024 Hotel Monitor, some cities have seen double-digit rate growth as corporate transient demand fully recovers.

Strategic Implications for Corporate Travel Management

For travel managers, these shifting dynamics underscore the need to rebalance travel policies and supplier negotiations. The air/hotel price divergence may prompt organizations to revisit reimbursement structures, encourage alternative accommodation types, or expand preferred supplier programs.

• Negotiating more robust hotel rate caps and leveraging volume discounts will be critical in 2025.
• Companies are increasingly adopting dynamic hotel pricing strategies via online booking tools to control costs in fluctuating markets.
• Flexible air travel policies and advanced booking lead times can help capitalize on favorable airfare trends while mitigating last-minute fare volatility.

The recent push toward sustainability and duty of care further incentivizes organizations to review their mix of air and ground travel, potentially shifting more investment toward hotels with green credentials and air carriers with lower emissions.

Looking Ahead: The Business Travel Recovery Continues

Despite economic uncertainties and evolving geopolitical contexts influencing global travel, the overall outlook for the corporate travel industry in 2025 is optimistic. FCM’s data, echoed by other leading TMCs and industry groups, suggests resilient demand will persist, even if pricing trends continue to diverge between travel categories.

Travel managers face both opportunities—lower airfares—and challenges—higher hotel costs as they strive to drive value for their organizations in an increasingly complex post-pandemic marketplace. Continued investment in data-driven travel management, supplier partnerships, and flexible program design will be essential for sustained success.