Demand for business travel services tipped to again outweigh supply in 2008
The American Express annual Global Business Travel Forecast has indicated that demand for business travel services will again outweigh supply in 2008. (10/24/2007)
This will drive continued increases in rates across air, hotel, car rental and corporate meetings and events. While worldwide airfares are expected to continue their climb, hotel rates are projected to experience high double-digit increases in demand-heavy markets across the US, Europe and Asia.
"Travel managers and procurement professionals can expect another capacity-restricted, challenging year and a continued push to keep travel and entertainment budgets in check. However, opportunities still exist to further control costs without curtailing business travel," said Mike Streit, Vice President and Global Leader for American Express Business Travel Advisory Services.
"Heading into 2008, successful T&E management strategies will focus not just on controlling travel expenses, but also on identifying additional areas to control costs and save, such as entertainment and related services including corporate meetings and events."
Streit added, "In 2008, we expect a domestic trip inclusive of airfare, car rental and hotel stay will increase six percent, or $63 USD, bringing the average trip cost to a total of approximately $1,110 USD. For an international trip, the increase is expected to be nearly seven percent, or approximately $205 USD, bringing the cost of an average trip to $3,171."
Global Airfare Forecast
Pricing pressures that have influenced the rise in airfares in the past are expected to continue in 2008, but more competition in certain markets should help ease increases.
· Fuel costs, improvements in airline inventory and pricing technology, capacity constraint and demand for long-haul are likely to drive price increases.
· We anticipate that greater competition through the USA-EU Open Skies Accord, growth of low-fare pricing models and more efficient aircraft will temper increases.
Global Hotel Rate/Meetings Spend Forecast
We expect that hoteliers around the world will continue to benefit from their market position in 2008.
· High demand and slow growth of supply is likely to force prices up and will impact access hoteliers give to last room availability rates. Companies may also encounter minimum and maximum stay requirements and instances when corporate rates do not apply.
· Continued infusion of capital to hotels should benefit travelers through renovations and upgrades of properties and additional amenities, particularly in lower market tiers. However, these improvements will force hotels to maintain rates at historic highs.
· Rising hotel rates are likely to contribute to the expected increase of 8% -10% percent in global meeting spend (guestrooms account for nearly half of all meeting spend, excluding airfare).
· Focusing on meetings as an area of savings will help drive down T&E expenses.