Business Travel Fares, Hotel Rates Approaching Pre-Recession Levels
American Express Business Travel recently released data from the 2010 third quarter Business Travel Monitor (BTM) North America, showing price increases are holding steady as business travel continues to rebound. Notably, data from the Q3 BTM reveals pricing power is shifting into the hands of suppliers as both international and domestic airfares and domestic hotel rates increased year-over-year in Q3 2010.
“During the past quarter we’ve witnessed a distinct shift from a buyers’ market to a suppliers’ market leading to higher prices across several travel categories including airfare and hotel rates,” said Christa Degnan Manning, director, eXpert insights research, Global Advisory Services, American Express Business Travel. “Airlines have been especially successful in constraining capacity and increasing fares to create more sustainable financial stability. This should prompt companies to revise travel cost-control tactics, identify new opportunities for travel return on investment, and ultimately change traveler behavior in response to the new increased price environment.”
With airlines exerting greater control over prices, business travelers have seen a third quarter year-over-year increase of six percent in average North American domestic airfare paid and a third quarter year-over-year increase of eight percent in average international airfare paid.
HOTEL RATES REBOUNDING
“Hotel rates have lagged behind the airline pricing rebound as savvy travel category sourcing professionals locked in lower prices at the end of 2009 based on on-going economic anxiety in the hotel community, but as business travelers headed back on the road hoteliers have been able to make marginal increases in 2010. Rates appear to be on a consistent rise domestically in the US, and an increase in hotel closures and a drop-off in the hotel construction pipeline due to the Great Recession will put some constraints on capacity moving forward. As such, companies need to evaluate the competitiveness of their rates across their top markets and identify opportunities during this negotiation season to avoid likely expected rate increases across the board in all tiers of properties,” continued Manning. “Global Advisory Services has already seen an average increase of more than 7% in corporate rates worldwide this year for 2011 business travelers.”
U.S. Cities with Highest Year-Over-Year Hotel Rate Increases
|City||Q3 2009||Q3 2010||Percent Change|
|New York, NY||$318||$348||+ 10%|
|New Orleans, LA||$138||$145||+ 5%|
|Washington D.C.||$249||$262||+ 5%|
|Las Vegas, NV||$119||$124||+ 4%|
|San Francisco, CA||$208||$216||+ 4%|
Source: Business Travel Monitor (BTM) North America. American Express Business Travel. 16 Dec. 2010. Web. 17 Dec. 2010.