Working on your 2012 budgets? Make sure you increase travel estimates for air, hotel and ground transportation. American Express Global Business Travel’s latest global forecast projects escalating costs across the board.
According to American Express Global Business Travel’s eXpert insights Business Travel Monitor, costs for flights and accommodations in 2011’s second quarter were 4 percent to 8 percent higher than in first quarter 2011, and 3 percent to 11 percent higher than they were a year ago.
The 2012 AmEx Global Forecast predicts North American airfares will increase an additional 3.5 percent to 5 percent max for economy long and short haul flights, respectively. Business class fares may increase by as much as 5 percent to 7 percent.
Thanks to mergers and alliances, airline companies have a more complete view of supply and demand this year than they have in the past, says Christa Degnan Manning, director of the eXpert insights Business Travel Monitor, and they have used this information to determine pricing very efficiently in 2011. The 2012 price increases for business class travel reflect airline optimism that next year will see more sales people on the road, traveling to retain and expand market share.
The AmEx Global Forecast expects that North American mid-range hotel rates will rise 2.5 percent to 6.5 percent. Upper-range rates are projected to increase by 1.5 percent to 5.5 percent.
A slowdown of new hotel development has created better hotel demand in 2011. Although hotels have followed the airline’s trend of unbundling services and charging fees for previously free amenities, Manning says savvy sourcing professionals are getting more of these included in with the higher base rates for their business travelers.
However, all markets are not rebounding equally.
Because of this, Manning recommends that travel managers benchmark rates by property tier and city. “Meeting planners will want to evaluate multiple destinations to avoid the biggest price increases in cost per attendee per day next year.”
Cities with the biggest price increases in Q2 2011 vs. Q2 2010 include San Francisco (+24 percent), Philadelphia (+14 percent), Seattle (+12 percent), Cincinnati (+11 percent) and Minneapolis (+ 8 percent).
The one bright spot in the forecast is that North American car rental base rates are projected to slightly decline or remain flat. Per day rates are only expected to rise by 2 percent to 3 percent. But, Manning cautions, travel managers need to pay attention to additional fees and services. That’s how car rental companies are seeking to recoup money from their steadily declining average daily rates.
For more information, visit americanexpress.com/businesstravel.