American Express Global Business Travel released first quarter figures on business travel pricing trends from its Business Travel Monitor for trips originating in North America and going to both domestic and international destinations. Domestic airfares this quarter have pushed past the pre-recession levels of Q1 2008 and hotel rates are on the rise…
American Express Global Business Travel released first quarter figures on business travel pricing trends from its Business Travel Monitor for trips originating in North America and going to both domestic and international destinations. Domestic airfares this quarter have pushed past the pre-recession levels of Q1 2008 and hotel rates are on the rise.
Q1 2011 Business Travel Monitor Highlights:
– Average domestic airfares increased ten percent (10%) in Q1 2011 vs. Q1 2010 to $247, surpassing the pre-recession average in Q1 2008 which was $233
– Average international airfares increased eight percent (8%) in Q1 2011 vs. Q1 2010 to $1866
– Average domestic hotel rates increased three percent (3%) in Q1 2011 vs. Q1 2010 to $150
– Average international hotel rates increased four percent (4%) in Q1 2011 vs. Q1 2010 to $238
“Airfare increases have been expected given the rise in the cost of oil and the return in demand in business travel,” said Christa Degnan Manning, director, eXpert insights research, American Express Global Business Travel. “On top of this, airlines are continuing to form alliances and joint ventures. As prices continue to increase and capacity levels remain tight, companies need to ensure they are following the market, reviewing travel spend and ensuring they are using suppliers and implementing policies that facilitate optimal cost savings opportunities.”
Pricing trends from the Business Travel Monitor support the overall business travel recovery underway as more organizations look to business travel as a means to help gain competitive advantage. In fact, findings from a new study, Business Travel: A Catalyst for Economic Performance, found that on average business travelers felt that 38 percent of their customers would be lost to competitors and that their companies would lose 37 percent in annual sales without in-person meetings. The new study examines the role that business travel plays in helping driving corporate performance and the development of the global economy, demonstrating the overall importance of getting travelers on the road. The study was commissioned by The World Travel & Tourism Council (WTTC), conducted by Oxford Economics with contribution and sponsorship from American Express Global Business Travel.
“This important research further demonstrates travel’s role as an engine for business success given its significant influence over customer relations, innovation and employee engagement, all of which is necessary for a company’s long-term sales growth” said Charles Petruccelli, President, American Express Global Business Travel. “We are seeing our clients understand this value and put their employees back on the road, but the affects of the recession still weigh on their budgets and they are looking to drive a return on every dollar spent on travel.”
Executives continue to emphasize the opportunity and value of business travel and meetings as respondents from the survey say that roughly half of their prospective clients are converted to new clients with in-person meetings versus a little bit less than one-third that are converted without.
Hotels
The moderate increases seen in average room rates are in line with American Express Global Business Travel’s forecast expectations as demand in travel increases.
“With the moderate rate increases we’re seeing this year that are due to increase in demand, companies need to be vigilant in ensuring travelers receive their corporate negotiated rate. Hoteliers are likely to try to continue increasing rates particularly, as we head into the negotiating season. However, companies that keep a close eye on market conditions and benchmarking actual rates paid in key travel destinations will be better positioned to maintain their discounts,” said Manning.
Manning concluded: “One way to combat rate increases in 2012 would be to lump group travel volumes with transient commitments thus leveraging total travel activity to maximize savings. Meetings are certainly part of the demand equation and will play a contributing factor in specific market rate changes next year.”
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
