Amex Forecasts Modest Rise In U.S., International Trip Costs

The global average cost of a business trip, including air, car rental and hotel expenditures, is expected to increase 2.8 percent to $1,139 domestically and 4.3 percent to $3,556 internationally, according to an American Express Business Travel Advisory Services 2009 forecast released today. In North America, the cost per domestic trip is expected to rise 1.2 percent to $1,002 and per international trip to $3,452, up 3.5 percent.

Due to such offsetting price pressures as capacity reductions and new ticketing restrictions versus reduced demand and sliding oil prices, the 2009 Global Business Travel Forecast offered a wide-ranging airfare projection, which includes the potential for base domestic airfares to decrease. U.S. domestic short-haul fares are expected to range from a decrease of 5 percent to an increase of 5 percent. U.S.-point-of-origin international long-haul business fares are expected to increase from 1 percent to 6 percent.

In Europe, which is experiencing its own mix of price pressures, Amex projects flat to moderate airfare increases. Short-haul fares will remain flat or have moderate increases of up to 4 percent. Long-haul flights are projected to increase from 1 percent to 9 percent.

While there is potential for a decrease in some U.S. airfares, vice president and general manager of Amex global advisory services and meetings solutions Hervé Sedky said airline ancillary and unbundled services could add an additional 15 percent on top of the base airfare and account for 2 percent to 3 percent of a corporation's total travel spending.

While global average trip costs are projected to increase moderately, travel buyers also can expect a more favorable hotel market in 2009 compared with the past several years, and have the added ability to push for some discounts, according to Amex.

Globally, buyers should expect the year-over-year change at midprice hotel rates to range from a 1 percent decrease to a 6 percent increase. At upscale properties, the forecast ranges from a 2 percent decrease to a 5 percent increase.

As overall rates moderate, there also will be more market variability, Sedky said. U.S. hotel rates largely to fall within the same ranges as the global forecast, the report indicated. Two key cities-New York and Washington, D.C.-could see increases as high as 9 percent, although most other key cities fall within the more moderate range.

Last-room availability will be easier to negotiate, although buyers might see fewer rooms fitting the standard room definition at properties, Sedky said. "Sophisticated yield management practices have become more prevalent," he said. "The definition of standard rooms will allow hotels to designate a smaller percentage of rooms to the LRA category."

Amex forecast car rental rates to hold fairly steady in 2009. In North America, the year-over-year average rate change will range from a 2 percent decrease to a 3 percent increase, despite rising costs within the major car rental suppliers. "The industry remains extremely competitive in going after corporate business and corporate accounts, and that holds price increases in check even as fleet costs are increasing," said Frank Schnur, global advisory services vice president of North America.

In lieu of rate increases, buyers should be wary of stricter terms and conditions in car rental agreements, Schnur said. For example, some suppliers are reducing the grace period in which travelers can return a vehicle before being charged for an extra day's rental, he said.