According to the American Express Global Business Travel Forecast, pent up trip demand coupled with supply base changes are likely to cause rates to slightly increase in most travel categories by the end of 2010. Business class airfares in particular are expected to increase in line with reduced capacity and on-going business demand for international travel.
The existence of these travel alternatives and changes in business policies underscores the new emphasis on measuring the return on investment in business connections and shifted focus on getting more trips out of the same budget. "As the world begins to show signs of emerging from the recession, businesses are adapting to a fundamental shift in thinking focused on proving the value of travel and every employee connection," said Hervé Sedky, vice president and general manager, American Express Business Travel. "Heading into 2010, companies will need to consider the impact of these changes in mindset, particularly as projected rate increases in key travel categories gain momentum."
A prolonged period of weak demand in the travel industry depressed prices across travel categories in 2009, most notably in hotel, which as an industry can not reduce capacity as well as airlines and car rental companies. Following this weakened demand in 2009, American Express Business Travel expects a pent up need for travel and meetings to be unleashed in 2010. Fuel prices, along with sustained signs of a restarting economy, could also generate slight up-ticks in travel category prices worldwide, particularly in Asia Pacific.?
"Considering airfare, hotel, and ground transportation, we expect the average domestic business trip to increase 1.2 percent, or $13 USD, to a total of approximately $1,080 USD," continued Sedky. "An increase of 2.4 percent, or approximately $67 USD, is expected for international business trips to bring the average cost to $2,818. However, as unbundled and ancillary fees continue to add to the cost of trips, businesses should expect to add up to an estimated 15% to the total trip cost for air, hotel, and ground transport elements alone."
Overall, business travel growth is predicted to be up one percent for the U.S. and 15 percent for Canada in 2010. Route and capacity reductions made in the region in an effort to equalize the decrease in demand in 2009 are expected to force prices up in North America in 2010, higher than most other regions. Hotel rates are expected to remain on the decline in North America as a whole as hoteliers fight to attract both business and consumer travelers back. Car rental rates will likely increase slightly as the cost of vehicles is expected to rise following decreases in capacity in 2009 and car manufacturing consolidation driving up the cost of replacing relatively old fleets.
The Forecast reports companies will have more formal oversight of their meeting planning and meetings spending in 2010. In addition, companies are expected to loosen purse strings on events and conferences, with potential inroads made by travel category managers adopting strategic meetings management programs.