Amex Business Travel Index Shows Domestic Fares Flatten

Domestic airfares remained relatively flat in 2007, unlike rising prices for international air service, car rental and hotels, according to American Express Business Travel's 2007 Business Travel Monitor, released today, which analyzes North America-based travel reservations pricing data.

The study showed the most significant increases on international airfares and room rates. International average airfares increased 7.6 percent to $1,836, the largest annual increase since the Monitor began in 1999. The average domestic airfare decreased $1 to $230. Average airfares paid are calculated using one-way averages paid by all business travelers booked by American Express Business Travel and includes multiple fare types including first class, unrestricted and discount fares. The company noted that business airfares are "generally the lowest refundable economy fare available to the business traveler."

"Travelers heeded the call to book their trips further in advance by taking advantage of lower, advance purchase fares," said vice president and general manager Hervé Sedky, who earlier this month became head of the company's advisory services consulting group. "Meanwhile, the continued expansion of low-fare models was counter-balanced by a slowdown in network airlines' capacity growth."

While no refuge was found in the domestic and international hotel markets as rates increased 11.3 percent to $157 and 7.6 percent to $266, respectively, advisory services hotel practice leader Priscilla Campbell said increases started to level off at the end of 2007 and have continued to do so in early 2008. "We've started to see a stabilization in the levels of increases that have taken place," she said. "As 2007 started to wrap up and programs were coming to an end, there were definitely increases that took place, but they weren't as dramatic as they had been in prior years."

The Monitor also provided a pricing analysis of the hotel tiers in the top 34 domestic markets, which experienced an overall 10 percent increase in the fourth quarter of 2007 compared with the fourth quarter of the prior year. The largest increases were in the economy, midscale and deluxe tiers at 13.4 percent, 9.5 percent and 11.6 percent, respectively. Those 34 markets saw a closing of chasms between tiers as some buyers "tier down" hotel programs and lower-tier hotels expand services and amenities, according to Campbell. "The lower tiers are bringing their prices up because now they are more in demand," she said. "It's blurring the lines a bit."

Domestic car rental rates increased 4.4 percent to $72. The average daily cost for car rentals data is derived from Amex corporate card data and includes all charges incurred during a rental period including mileage, gas, tax and insurance.