Business Travel Prices Continue Rebound According to American Express Business Travel Monitor
American Express Global Business Travel released business travel pricing trends for the second quarter of 2011 from its eXpert insights Business Travel Monitor (BTM), its long-term price trending index for domestic and international trips originating in North America. The BTM data demonstrates continued rate increases for flights and accommodations as suppliers continue to take advantage of the return in demand and other market factors to raise rates.
As hotel new development pipeline slowed with the uncertainty in the economy, hoteliers have benefited from more favorable demand to supply ratios by and large in 2011
Pricing Snapshot Q2 2011 Business Travel Pricing Trends:
Average domestic one-way airfares increased to $260 in Q2 2011
- An eight percent (8%) increase from $240 in Q2 2010
- A five percent (5%) increase over the previous quarter, $247 Q1 2011.
Average international one-way airfares increased to $1970 in Q2 2011
- A nine percent (9%) increase from $1810 in Q2 2010
- A six percent (6%) increase over the previous quarter, $1866 Q1 2011.
Average domestic hotel rates increased to $156 in Q2 2011
- A three percent (3%) increase from $151 in Q2 2010
- A four percent (4%) increase over the previous quarter, $150 Q1 2011.
Average international hotel rates increased to $258 in Q2 2011
- An eleven percent (11%) increase from.$232 in Q2 2010
- An eight percent (8%) increase over the previous quarter, $238 Q1 2011.
Trending Insights – Airfares
Tickets for both domestic and international flights have been consistently higher for companies throughout 2011 compared to each respective month in 2010. Having passed the pre-recession pricing levels last quarter, airfares have continued to rise. The year-to-date average fare increase has slowed the last two months, however, suggesting that fares may be stabilizing.
With the on-going supplier consolidation and alliance activity around the world and more businesses looking to aggressively channel volume with fewer suppliers, airlines have a more complete view of supply and demand than ever before and have used this information to determine pricing very effectively this year, said Christa Degnan Manning, director, eXpert insights research, Advisory Services, American Express Global Business Travel. Additionally, to some extent they have been able to raise rates in response to increasing energy costs to try to protect the recent profit margins the industry has generated. While rate increases have slowed, its highly unlikely average airfares for businesses will decrease in the near future so companies should be preparing to mitigate cost increases through careful contract negotiations, traveler decision support, policy compliance, as well as aligning and defending budgets according to 2012 business plans.
Trending Insights Hotels
Recovery in the hospitality industry continues with many companies paying more for their travelers to book accommodations.
As hotel new development pipeline slowed with the uncertainty in the economy, hoteliers have benefited from more favorable demand to supply ratios by and large in 2011, noted Manning. In addition, many hoteliers have renewed focus on the business traveler as this more lucrative sector of travel has picked up. As hoteliers have followed the supply trend of offering more fee-based services however, savvy sourcing professionals are getting more of these included in with the higher base rates for the business traveler, which helps businesses have more predictability in travel-related costs. With this backdrop, companies should focus their approach to negotiations with hotel suppliers for 2012 to obtain the best overall value, rather than simply the lowest base rate.
Concluded Manning, “As hotel market pricing is always about location, location, location, the recovery for certain areas has been particularly strong driving hotel rates in recently popular destinations up much more rapidly. Travel buyers will need to rely heavily on volume and the ability to deliver market share to secure competitive rates in these regions, while meeting planners will want to evaluate multiple destinations to avoid the biggest price increases in cost per attendee per day next year.
U.S. Cities with Highest Hotel Rate Increases in Q2 2011 vs. Q2 2010
|City||Q2 2010||Q2 2011||
|San Francisco, CA||$176||$219||24%|