The National Business Travel Association anticipates overall corporate travel costs will rise by 7 percent next year, according to a survey of 150 travel buyers released yesterday.
Concluding that travel demand and its corresponding prices should continue upward, NBTA's survey concurs with projections in other recent business travel forecasts released by Smith Barney, the Business Travel Coalition and Runzheimer International.
NBTA forecasts all major travel sectors-air, hotel and car rental-to swing upward in price. Hotel is expected to see the biggest jump next year, increasing by 7.5 percent, NBTA said. Meanwhile, the rates for both air travel and car rental are expected to be 5 percent higher in 2005 than in 2004. American Express, which released cost projections earlier this month, also predicted increases in hotel and air rates, yet lower than NBTA
(BTN, Oct. 25).
NBTA said the data portend a return to better times for the corporate travel industry. "The forecast indicates that in 2005 the business travel industry will see a recovery to levels seen in 2000," the association said in a statement. The report goes on to say, "The moment that many in the business travel industry have been waiting for is finally here. After years of cost cutting, layoffs and cutbacks, business travel is back."
NBTA, however, is less sanguine about recovery for the airlines, both the major carriers and some low-fare competitors. "Low-cost carriers have fared well in the market, growing capacity and passenger traffic, and attracting more business travel each year," NBTA said. "However, some low-cost carriers are beginning to face the challenges legacy carriers have been working on in recent years, including high labor and fuel costs. While legacy carriers are taking steps to reduce their cost structures, 2005 could see more airlines entering into bankruptcy court protection."
Meanwhile, the cost of meals is following the same trajectory as those for air, hotel and car, rising 3 percent next year. "Restaurant prices are increasing due to higher costs labor, locations and product. Meal prices have consistently increased each year that NBTA has done the annual forecast, and 2005 is no exception," NBTA said.