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AMEX Business Travel Sees Economic Hope

December 17, 2009 By: George Dooley

New American Express data reveals a glimmer of economic hope with modest fare increases and travelers moving to the front of the plane again— both positive signs companies may likely be feeling more optimistic about the economy. American Express Business Travel’s third quarter Business Travel Monitor (BTM) shows travelers are returning and raising guarded hopes of economic recovery.

"While economists watch key market indicators such as inventory levels and unemployment, we may be seeing a glimmer of economic hope as the Business Travel Monitor data shows modest fare increases and travelers moving to the front of the plane again,” said Christa Degnan Manning, director, eXpert insights, global advisory services, American Express Business Travel. “This is an encouraging sign for the business travel industry because it indicates increasing demand as well as willingness to pay for premium products, which help with supplier profitability and their ability to provide consumer discounts."

Average international and domestic airfares paid increased 2 percent quarter-over-quarter as car rental rates increased 5 percent in the third quarter but remained flat year-over-year. Average international booked hotel rates decreased 10 percent year-over-year as average domestic booked hotel rates decreased 2 percent year-over-year but increased 7 percent in budget-tier hotels quarter-over-quarter.

The BTM is published by eXpert insights, American Express Business Travel’s research practice of Global Advisory Services. The BTM is a monthly pricing index tracking actual airfares paid on the most popular business travel routes for domestic and international travel compared to published prices. It also tracks paid hotel and car rates in key business travel markets.



International and domestic airfares paid from North America increased quarter-over-quarter, where as year-over-year airfares continue to be down. From a hotel perspective, rates varied across hotel categories quarter-over-quarter, but overall average rates decreased both internationally and domestically. In looking at individual hotel tiers, rate increases were evident in budget, economy and mid-tier categories.

"Pent-up trip demand coupled with supply base changes have caused rates to slightly increase in the third quarter," said Manning. "There has also been a slight increase in the usage of business class tickets for international travel, up one percent from last quarter, to 37 percent. However, this is still down year-over-year from 49 percent of all international business traveler tickets

Hotel Rates

Continued drop in demand has impacted both international and domestic hotel bookings. "Since hotels can not reduce capacity as easily as air or ground transport providers, this drives rates down, and the effect will likely continue through the first half of 2010," Manning added. "However signs point to an increase in demand from the bottom up, where rates have notably increased up to seven percent in lower hotel tiers, driven by a positive up-tick in demand from travelers wanting to travel, yet doing so more cost-consciously."

The BTM includes both average published and purchased air fares captured across hundreds of domestic and international routes, including unrestricted first class, business, economy, and discounted, restricted economy air fares. The methodology for the average air fare paid is the one-way price paid by all travelers booked through American Express Business Travel, including taxes and fees, for all routes.




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