Amex Forecasts Slight Rise In 2003 Travel Costs

American Express today released its Trends and Forecasts for the Business Travel Industry Preview for 2003, predicting business travel and entertainment costs will rise by 2 percent to 3 percent next year.

Of the key market costs forecasted in the study, hotel room rates are the only costs expected to remain flat or slightly decrease over next year. Airfares, car rental rates, meals and telecommunication costs are expected to increase.

After holding steady this year over last year, airfares are expected to make the largest increase with domestic business fares predicted to rise between 3 percent and 4 percent and international airfares increasing 4 percent or 5 percent.

"Over the past few years, companies have tightened their travel programs and reduced air travel spending by using more leisure-type fares," vice president of supplier relations and consulting for American Express Corporate Travel Brian Mogler said in a statement. "But many will see their average fares rising now that airlines have put new restrictions on the lowest fare and stopped applying corporate discounts to them. In addition, barring further economic downturn, business travel demand is likely to improve, creating upward pressure on pricing."

American Express predicted that daily car rental rates will increase between 2 percent and 3 percent; meals and telecommunications are expected to increase at about the same rate.

The National Business Travel Association yesterday released its own forecast. NBTA predicted a larger cost increase, with overall travel and entertainment expenses jumping 5 percent for 2003.