International airfare was up 21% in 2007

American Express Business Travel publishes price benchmarking data

By Susan Avery -- Purchasing, 4/15/2008 12:46:00 PM

International airfare and hotel rates rose in 2007, while domestic airfare remained stable, according to the 2007 Business Travel Monitor published today  by American Express Business Travel in New York. 

The benchmarking tool provides analysis of North American-based domestic and international air, hotel and car rental rates for the full year 2007.

International airfare increased to its highest level since American Express first published its Business Travel Monitor in 1999. For 2007, the average was $1,836. In 2006, it was $1,707. Reason for the increase: Rising fuel costs coupled with strong travel demand. average international airfare paid has risen 21% since 2004.
“No region was immune to price increases as airfares to Asia, Australia, Central America, South America and Europe all experienced double-digit growth,” says Herve Sedky, vice president and general manager, global advisory services, at American Express Business Travel. “With global economies continuing to develop and expand, demand for international business travel has remained high. At the same time, carriers continue to weather surging oil prices.”

After jumping 7% from 2005 to 2006, the average domestic airfare stabilized in 2007 due to a combination of factors. “Travelers heeded the call to book their trips further in advance by taking advantage of lower, advance purchase fares,” says Sedky. 

Growth in business and leisure travel placed hefty demand on an already short supply of hotel rooms. Domestic hotel rates remained relatively steady throughout each quarter of 2007. The deluxe hotel segment was the exception. Deluxe hotels continued to experience double-digit increases, while economy and budget tier rates flattened out. In other hotel segments, the price differential between budget, economy and mid-price hotel tiers began to blur amidst tough competition. Average domestic booked rates rose $16 to $157 in 2007. International averaged booked rates increased $36 to $226 in 2007.

Overall, domestic car rental rates increased 4.4% as rental firms battled to offset high operating costs. 
Looking ahead, the American Express Global Business Travel Forecast published late last year shows demand for corporate travel services outpacing supply, driving prices up in 2008. Expected to experience the biggest price increases: Airfares worldwide and hotel room rates.

At the same time, American Express Business announced that it has added change management as a consulting competency in its Advisory Services organization to help corporations defray the rising cost of travel and implement their T&E (travel and entertainment) programs. The new service provides best practices for monitoring and influencing traveler behavior to improve compliance to corporate policies and procedures.