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Domestic Business Airfares Back to Pre-Recession Levels

June 15, 2011 By: George Dooley Travel Agent

Domestic business travel airfares have surpassed their pre-recession average in Q1 2008, rising 10 percent in Q1 2011 versus Q1 2010 to an average of $247. In addition, domestic hotel rates rose 3 percent over the last year to an average of $150 per night, according to American Express Business Travel's latest Business Travel Monitor (BTM) report for the first quarter of 2011.

The airfare increases were expected given rising oil prices and the return in demand for business travel, the BTM says. Likewise, hotels’ moderate rate increases are the product of increased demand and hoteliers are likely to attempt to continue to increase rates. Specifically, year-over-year average international airfare paid increased 8 percent to $1,866 in Q1 2011 while the year-over-year average international hotel booked rates paid increased 4 percent to $238 in Q1 2011.

The BTM also identified the five U.S. domestic markets with the highest hotel rate increases in Q1 2011 vs. Q1 2010: San Francisco (+16 percent); Seattle (+9 percent); Austin (+8 percent); Omaha, NE (+8 percent); and New York (+8 percent).

Q1 2011 Business Travel Monitor Highlights include:

Average domestic airfares increased 10 percent in Q1 2011 vs. Q1 2010 to $247, surpassing the pre-recession average in Q1 2008 which was $233

Average international airfares increased eight percent (8%) in Q1 2011 vs. Q1 2010 to $1866

Average domestic hotel rates increased three percent (3%) in Q1 2011 vs. Q1 2010 to $150

Average international hotel rates increased four percent (4%) in Q1 2011 vs. Q1 2010 to $238

“Airfare increases have been expected given the rise in the cost of oil and the return in demand in business travel,” said Christa Degnan Manning, director, eXpert insights research, American Express Global Business Travel. “On top of this, airlines are continuing to form alliances and joint ventures. As prices continue to increase and capacity levels remain tight, companies need to ensure they are following the market, reviewing travel spend and ensuring they are using suppliers and implementing policies that facilitate optimal cost savings opportunities.”

Pricing trends from the BTM report support the overall business travel recovery underway as more organizations look to business travel as a means to help gain competitive advantage. In fact, findings from a new study, Business Travel: A Catalyst for Economic Performance, found that on average business travelers felt that 38 percent of their customers would be lost to competitors and that their companies would lose 37 percent in annual sales without in-person meetings.

The new study examines the role that business travel plays in helping driving corporate performance and the development of the global economy, demonstrating the overall importance of getting travelers on the road. The study was commissioned by The World Travel & Tourism Council (WTTC), conducted by Oxford Economics with contribution and sponsorship from American Express Global Business Travel.

“This important research further demonstrates travel’s role as an engine for business success given its significant influence over customer relations, innovation and employee engagement, all of which is necessary for a company’s long-term sales growth.” said Charles Petruccelli, President, American Express Global Business Travel. “We are seeing our clients understand this value and put their employees back on the road, but the affects of the recession still weigh on their budgets and they are looking to drive a return on every dollar spent on travel.”

Executives continue to emphasize the opportunity and value of business travel and meetings as respondents from the survey say that roughly half of their prospective clients are converted to new clients with in-person meetings versus a little bit less than one-third that are converted without.

The moderate increases seen in average room rates are in line with American Express Global Business Travel’s forecast expectations as demand in travel increases.

“With the moderate rate increases we’re seeing this year that are due to increase in demand, companies need to be vigilant in ensuring travelers receive their corporate negotiated rate. Hoteliers are likely to try to continue increasing rates particularly, as we head into the negotiating season. However, companies that keep a close eye on market conditions and benchmarking actual rates paid in key travel destinations will be better positioned to maintain their discounts,” said Manning.

Manning concluded: “One way to combat rate increases in 2012 would be to lump group travel volumes with transient commitments thus leveraging total travel activity to maximize savings. Meetings are certainly part of the demand equation and will play a contributing factor in specific market rate changes next year.”



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By George Dooley | June 15, 2011
Travel is as an engine for business success, impacting customer relations, innovation and employee engagement.
Filed under : Trends-Research