Prices for travel expected to rise in 2008, says American Express
By Susan Avery -- Purchasing, 10/23/2007 7:15:00 PM
Demand for corporate travel services will outpace supply, driving prices up in 2008, according to the American Express Global Business Travel Forecast. Expected to experience the biggest price increases: airfares worldwide and hotel room rates.
The Forecast shows domestic/short haul (economy class) airfares in North America rising 1% to 5%. Hotel rates could climb 4% to 7% for mid-range rooms and 5% to 8% for upper-range rooms.
While fuel costs, improvements in airline inventory and pricing technology, capacity constraint and demand for long-haul fares are likely to drive increases in airfare, greater competition through the USA-EU Open Skies Accord will temper the airfare hikes.
Strong demand and slow supply growth are likely to force up hotel room rates. Since guestrooms account for nearly half of all meeting spend (excluding airfare), rates are likely to contribute to an expected increase of 8% to 10% in global meeting spend.
“Travel managers and procurement professionals can expect another capacity-restricted, challenging year and a continued push to keep travel and entertainment (T&E) budgets in check,” said Mike Streit, vice president and global leader for American Express Business Travel Advisory Services in New York. “However, opportunities still exist to further control costs without curtailing business travel.” He suggested T&E management strategies that focus on controlling travel expenses as well as identifying additional areas to control costs and save, such as entertainment and related services including corporate meetings and events.”
The Forecast also shows car rental costs rising 2% to 4% in North America in 2008.
Priscilla Campbell, practice leader, hotel, advisory services for American Express Business Travel offers tips for corporate travel buyers negotiating room rates with hotels for 2008 in No vacancy: Travel buyers facing a seller’s market.
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