Travel Leaders Corporate has released an analysis of its clients’ aggregate business travel bookings from the fourth quarter of 2016.
This data indicates that the overall cost for domestic and international business trips (air, hotel and car rental) continued to decline. It was the least expensive quarter for U.S. business travel since the 4th quarter of 2013 and the overall international trip cost of $2,167 is nearly 17 percent lower than Q4 of 2014. Additionally, the average nightly rate for U.S. hotels was $151, down from Q3; there was a slight decline in the average rates for international hotel rates to $179, as well. City by city, the top 25 markets in the United States generally showed overall increases in average nightly hotel rates since 2013. Quarter over quarter though, many showed small declines.
The average cost of a U.S. business trip – including air, car and hotel averaged together – in Q4 2016 fell 4 percent to $945 (from $980). This was the second consecutive quarter that the average domestic trip price has fallen and is the lowest it’s been since Q4 2013. It should also be noted that Q4 is traditionally slower for business travel and pricing falls in line with decreased demand. The average cost of an international business trip was $2,167, a 5 percent decline from Q3 2016 and nearly 4 percent lower than Q4 2015. The strong value of the U.S. dollar continued to play a significant role, much to the benefit of American business travelers.
“There is a natural cycle in business travel, whereby the fourth quarter is typically slower than the rest of the year. However, for those companies who continued to invest in travel, they experienced far greater returns based on the overall costs,” said Gabe Rizzi, president of Travel Leaders Corporate. “We will be keeping a close eye on how those trends may shift with the start of a new year and with a new administration in the White House.”
Travel Leaders Corporate also released information on comparable hotel rates. The average total trip cost for domestic hotels fell sharply in the last quarter of 2016. However, the average nightly cost of a hotel remained on the upward trend of the last several quarters. Those competing trends indicate that business travelers spent more per night on hotel rooms and offset that by shortening the length of their stay.
Also, according to Travel Leaders Corporate’s business travel data, 22 of the top 25 cities in the country showed increases over the last three years in average nightly hotel rates. This quarter, however, colder weather affected both northern and southern cities. In Florida, the average nightly hotel rates in Fort Lauderdale, Miami, Orlando and Tampa rose an average of 15 percent from the third quarter of 2016. Most cities in northern locations were uniformly affected in Q4, with Minneapolis showing the largest decline of all locations with hotel prices 20 percent lower from Q3 2016.
“The opposing quarterly trends, based on geographic location, are understandable. The takeaway is really that the average nightly rate for hotels continues to increase,” added Rizzi. “Heading into 2017, we believe U.S. hotel rates will continue to increase, likely a mid-single digit increase. In Europe, we also anticipate hotel rates will increase slightly.”
Other key findings:
- Airline Advanced Purchase: Travel Leaders Corporate’s fourth quarter data indicates that corporate travelers are split nearly evenly in each category of advanced purchasing of airline tickets: 0-6 days before departure, 7-13 days before departure, 14-20 days before departure, and 21 or more days before departure. As a best practice, Travel Leaders Corporate recommends booking at least 14 days in advance for cost savings, and for those booking at least 21 days in advance, instead of 0-6 days, there is an average price difference of $161.
- Rental Cars: The average daily rate for car rentals nationally rose nearly 3 percent, with 15 of the top 25 markets showing increased rental rates.