American Express Global Business Travel today released first quarter figures on business travel pricing trends from its Business Travel Monitor for trips originating in North America and going to both domestic and international destinations. Domestic airfares this quarter have pushed past the pre-recession levels of Q1 2008 and hotel rates are on the rise.
Q1 2011 Business Travel Monitor Highlights:
- Average domestic airfares increased ten percent (10%) 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."
Companies Place Value on Face-to-Face Meetings
Pricing trends from the Business Travel Monitor 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."
Hotel Rates Paid
Hotel Rates Paid
Biggest Gainers: U.S. Cities with Highest Hotel Rate Increases in Q1 2011 vs. Q1 2010
|City||Q1 2010||Q1 2011||Percent Change|
|San Francisco, CA||$178||$206||16%|
|New York, NY||$270||$290||8%|
About the American Express Business Travel Monitor, North America
The American Express Business Travel Monitor is a key deliverable of American Express Global Business Travel Global Advisory Services' eXpert insights research practice. Using US business travel point of sale data, it benchmarks the average prices paid for air, hotel, and car rental service by class of service for hundreds of key business travel destinations globally through aggregate analysis of American Express' extensive database of travel booking and payment information.
The Business Travel Monitor includes both average published and business traveler 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 Global Business Travel, including taxes and fees at ticketing point of sale, for all routes.
Average booked hotel rates, both international and domestic, represent the total spending of all American Express Global Business Travel clients, excluding taxes, divided by the total number of room nights confirmed. The full Business Travel Monitor includes hotel averages by major city neighborhoods and category of hotel by price range. The average daily cost for car rentals is drawn from American Express Corporate Card data and includes all charges incurred, including mileage, gas, tax and insurance, divided by the average length of rental. Data for the distribution of rental class categories is drawn from all rentals booked by the entire American Express Global Business Travel customer base.
About the Research
To conduct the study, Oxford Economics carried out surveys of 500 global business travelers and executives in the United States, United Kingdom, Germany, Brazil, and China. In addition to this, an econometric analysis covering 190 countries tested for causal relationships between business travel and national economic performance. The full report, Business Travel: A Catalyst for Economic Performance, is available free online on WTTC.org and by clicking here.
About American Express Global Business Travel
American Express Global Business Travel, a division of American Express Company, is a global industry leader in business travel and meetings management committed to helping businesses succeed through cost-effective program management, world-class customer service, and enhanced traveler productivity and support worldwide. Through leading online, offline and on-the-go solutions, consulting services, business insights and research, supplier negotiation expertise, and meetings and events capabilities, innovative services are delivered to clients to maximize their return on investment. Learn more at americanexpress.com/businesstravel interact with peers on businesstravelconnexion.com and follow us on facebook.com/businesstraveconneXion and twitter.com/btconnexion.
American Express operates one of the world's largest travel agency networks with locations in over 140 countries worldwide. Total travel sales volume processed in 2010 was $25.7 billion, including consolidated volume and non-consolidated volume processed through joint ventures and partner network.
American Express Company is a global services company, providing customers with access to products, insights, and experiences that enrich lives and build business success.