Business Travel Forecast: Airfares Could Dip, But Fees Will Still Bite

American Express Business Travel announces adjusted results of business travel forecast in anticipation of global economic slowdown


  • Companies should revisit their travel policies to ensure that travelers have a comprehensive guide to navigate the current travel environment.
  • In addition to a tight travel policy, demand management and an increased focus on traveler compliance can deliver savings.
  • Benchmarking that is based on average segment cost or average ticket price is no longer sufficient due to the expansion of airline fees. Companies should benchmark the entire cost of a trip in an effort to minimize expenditures related to business travel.


Regional Highlights



North American

  • Air: In keeping with global trends, the North American segment will likely see reduced capacity, increased ticketing restrictions, menu-based pricing (especially in the U.S. market) and stricter contract enforcement.
  • Hotel: Demand for hotel rooms in key U.S. cities will likely continue to put upward pressure on rates.
  • Car: Rental taxes and higher fuel prices may add to the strain on rental car budgets.




  • Air: Reduced demand, potentially falling fuel prices and efforts by companies to gain greater policy compliance and demand management will likely help keep costs down.
  • Hotel: As the pendulum swings toward a buyer's market, slowing domestic demand and occupancy rates (which could be offset by increases in international demand) coupled with increased inventory and tighter restrictions from corporations could moderate fare increases.
  • Car Rental: Competition will help to moderate any increase in the cost of a car rental, while an anticipated increase in demand, which is expected to be led by corporations directing employees to car rentals instead of using their personal vehicles, will add pressure to increase the cost of a rental.

European

  • Air: Increased demand on Asian business routes may drive higher pricing along with volatile fuel costs and a decrease in capacity for short-haul routes.
  • Hotel: Demand is strong in cities with substantial oil and natural resource sector and gateway cities linked to this sector such as Aberdeen, Dubai, Oslo and Moscow.



  • Air: The slowdown in the economy could cause a decrease in demand at the same time as competition for international and long-haul routes increases.
  • Hotel: Decreasing demand as a result of slowing business traffic to areas exposed to the financial services industry (specifically London and Frankfurt) should help mitigate increases in 2009.

Latin America and Caribbean

  • Air: Capacity reductions, driven partially by industry consolidation and liquidation, along with rising fuel costs should put upward pressure on airfares.
  • Hotel: Higher operating costs may drive rate increases in the coming year.



  • Air: Improved corporate travel policy compliance and demand management, along with increased penetration of the market by low-fare carriers, may help negate some of the projected increases.
  • Hotel: A decrease in demand based on the current air industry situation and the introduction of additional supply to the market should help mitigate rate increases.









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