Smarter Sourcing Seen Needed to Counter Rising Air, Hotel and Car Rental Rates

Buyer demand, tightened inventories and higher supplier operating costs to continue upward pressure on corporate travel prices in 2007, predicts American Express Business Travel


Domestic fares in the region will rise 1-3 percent, while international fares will climb 4-7 percent, with Argentina and Brazil's business-class fares showing the largest price increases. Domestic fares in Mexico, however, are expected to decrease 5-9 percent due to the rapid growth of low-cost carriers.

On the hotel front, rates in most of Latin America's key business markets are expected to rise significantly due to more travel to the region. Hotel rates should increase an average of 2-4 percent in the midrange tier and 2-7 percent in the upper-range tier.

In Argentina, rates are projected to climb 4-6 percent at midrange properties and 4-7 percent at upper-range properties. Similarly, rates in Mexico should climb 2-3 percent at midrange properties and 3-5 percent at upper-range properties.

Car rental rates are expected to grow 1-3 percent on a year-over-year basis.

Asia-Pacific Trends

In Asia-Pacific, average air fares will climb 3-5 percent. Asia-Pacific also continues to power ahead on the low-cost front, and the region is expected to see its first long-haul, low-cost model by the end of 2006. India now has six low-cost carriers in the sky, with more to come in 2007, and the country is expected to be the world's largest low-cost carrier market by 2010.

On the hotel side, American Express Business Travel forecasts a 0-25 percent increase in midrange hotel rates across the JAPA region. Leisure travelers will continue to compete directly with business travelers for rooms, leaving hotels with the confidence to increase transient rates. Room inventory in the mature corporate markets of Australia, Hong Kong, Japan and Singapore is growing at a slower rate than air capacity, thus affecting supply and driving rates higher.

Rental car rates in Asia-Pacific are expected to grow 1-3 percent on a year-over-year basis.

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