Inside Track - 1996-12-16

<FONT SIZE="+3"><B>Inside Track</B>

<B>Biz Travel Costs To Rise</B>

American Express last week formalized what it called "a pretty chilling forecast for corporations" with its official projections of travel cost increases for 1997. Leading the climb is the meetings sector, where costs are expected to rise 10 percent for the third consecutive year because of lower inventory and increased demand. Also expect to pay more for air tickets, projected to rise another 8 to 9 percent in 1997, over the 1996 average business airfare of $732; for hotel rooms, rising 5 to 7 percent from the 1996 average corporate rate of $118; and for car rentals, up 4 to 5 percent from this year's average daily cost of $47.66 (including gas, tax and insurance).

Amex expects an overall hotel occupancy rate of 65.4 percent in 1997, meaning key business destinations will be "fully booked" in high seasons, with the rise in supply (2.4 percent) slightly outstripping the increase in demand (2 percent). Trackable corporate meeting spending will reach a record high of $80 billion thanks to more accurate spending data, more meeting-related travel and a 3 percent increase in attendance at educational seminars sponsored by associations.

<B>Direct Settlement For Airlines?</B>

Airlines, agencies and corporate customers are talking about the possibilities of direct settlement-paying the airline by check and saving credit card and Airlines Reporting Corp. costs. A myriad of issues needs to be overcome before it becomes a viable practice, including the increased accounting burden for the airlines, but software is being built to handle such problems. No deals are confirmed, but one source said at least two airlines and two corporations are experimenting with the practice.

<B>Carriers Shy Away From Bulk Selling</B>

Corporations hoping to benefit from the expected Jan. 1 lapse in the 10 percent ticket tax by buying in bulk are finding the airlines less willing to do so than they were last year (<I>BTN</I>, Jan. 15). "It's happening a bit, but the airlines are reluctant because last year they did a lot of it, and as airfares rose, too many of their corporate customers were locked in at lower fares," said Eric Altschul, director of client travel purchasing for American Express. Still, word is that airlines, including American and Continental, have done at least a few such deals. One source said Continental will be willing to sell in bulk even after Jan. 1, if the economics are right.

<B>Six Airlines Respond To BTCC Bid</B>

Six new airlines responded to the Business Travel Contractors Corp.'s November RFP (<I>BTN</I>, Oct. 7), which included travel to 26 cities. Including Southwest, the airlines cover more than 4,500 city pairs for the program, which applies an airfare structure limited to 20 airfare categories. BTCC president Kevin Mitchell would not reveal which new airlines responded, although he said one of them is among the top eight majors. An official at one major hub-and-spoke carrier said the airline's interest in the BTCC is higher following the November bid.

<B>TravelOne To Buy Agency</B>

Super-regional agency TravelOne Inc. is about to announce its first major acquisition and remains on the lookout for more Northeast-corridor agencies to buy, according to marketing and planning vice president Charles Roumas. "We'd like to become a $1 billion company, which means doubling our sales, by the end of the century," Roumas said. The Mt. Laurel, N.J.-based agency has expanded into Pittsburgh, Philadelphia, Washington and New York, "but now we're looking for an acquisition in Boston," Roumas said.

<B>Hilton Tests Internet Access</B>

Hilton will unveil Internet kiosks in two San Diego hotels this month. The test will place kiosks in lobbies near the telephones, enabling guests to pick up e-mail or surf the Web, said Jeff Diskin, vice president of corporate marketing.