* Global airfares to rise 2.6 pct, hotel rates up 3.7 pct

* Asia, Europe to see biggest price increases

* Downside risks from trade war

By Jamie Freed

SINGAPORE, July 24 (Reuters) – A strong global economy and
rising oil prices are expected to push up the cost of air travel
in 2019, with fares seen rising 2.6 percent and hotel rates up
3.7 percent, although there are downside risks from a trade war,
according to an industry forecast.

In some countries, including India, New Zealand, Norway,
Germany and Chile, airfares are expected to rise by more than 7
percent, said the annual business travel forecast from Carlson
Wagonlit Travel (CWT) and the Global Business Travel Association
(GBTA) released on Tuesday.

“Speaking for the Asia-Pacific region, we are coming off a
period three to four years ago where there was a lot of capacity
in the system (and) fares were down pretty significantly,
potentially lower than was sustainable,” said Michael Valkevich,
CWT’s vice president for global sales & program management, Asia
Pacific.

“So I think we are getting to a bit more of a
renormalisation of sustainable fares.”

The International Air Transport Association in June forecast
passenger yields, a proxy for airfares, would rise by 3.2
percent this year in the first increase since 2011 as a stronger
global economy drives growth in demand. CWT/GBTA predicted a 3.5
percent rise in airfares in 2018 in a forecast released last
year.

Airline costs, including for fuel and labour, have been
rising, leading carriers to attempt to push up fares or add fuel
surcharges to maintain margins.

The CWT/GBTA 2019 forecast said the rise in hotel rates
would be driven by an increased demand for air travel, which
would fuel demand for rooms. Room rates are expected to rise by
more than 5 percent in Asia and Europe, by 2.1 percent in North
America and to fall by 1.3 percent in Latin America.

Hotel groups including France’s Accor SA and
U.S.-based Marriott International Inc have reported
strong growth in revenue per available room in Asia and Europe
this year.

The CWT/GBTA forecast said despite its positive outlook,
risks remained for the global economy in 2019 from the rise of
protectionist policies, the stoking of trade wars and
uncertainty over Britain’s exit from the European Union.

Valkevich said the U.S.-China trade war had not yet led to
any noticeable drop in demand for business travel, but it was a
“downside risk factor” for the corporate travel industry.
(Reporting by Jamie Freed; Editing by Gopakumar Warrier)