Good Outlook For Business Travel

November 14, 2003
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Business travel will cost about 6 percent more in 2004, with business-class airfares leading the way.

That’s the picture emerging from a national trade association’s annual cost survey.

Overall, business airfares will rise 5 percent in 2004 to an average cost of $1,273, states the outlook from the National Business Travel Association.

Elsewhere, the association projects the cost to rent a car to rise 2 percent in 2004, to an average daily rate of $69, and hotel rates to increase by an overall 3 percent.

A different outlook, from American Express, shows hotel rates increasing at a “modest rate” and business airfares rising next year at a lower rate for domestic, short-haul and international flights.

Both outlooks indicate that business travel should rebound after two tough years, including a 2003 that saw travel volumes driven down by war with Iraq, the SARS outbreak and fears of terrorism.

The soft U.S. economy reportedly also forced travel managers to curtail spending.

With business forecasts picking up sharply this month, airlines may offer fewer discounts and fare reductions to lure business travelers.

Nationally, the Travel Industry Association of America anticipates that business travel volumes will grow by 4.2 percent in 2004 and 3.5 percent in 2005.

“This is obviously great news for the airline and hotel companies, but travel managers might be less positive, as they are the ones facing potential cost increases next year,” said Matthew Davis, director of global consulting services for American Express.

“It could spell bad news for business travelers who have grown accustomed to lower fares over the past two years,” he added.

American Express forecasts that domestic and short-haul airfares will rise 1 percent for 2004 and international business class fares will increase 3 percent to 4 percent.

Corporate hotel rates at mid- and upper-range hotels will rise by up to 1 percent, according to the recent American Express survey.

In the last few years, business travelers have generally actively sought out discounts and been increasingly willing to use leisure class tickets and no-frills low-fare air carriers to get the best value and meet their travel budgets.

The recent outlook published by the National Business Travel Association states that many corporations have imposed stricter adherence to travel policies as a way to curtail costs.

Too, many firms curtailed business travel because of valuable man-hours lost due to airport screening.

“Travel departments have been adjusting to tougher economic conditions and security concerns during the past few years,” association President Carol Devine said.

“As we move into 2004, NBTA predicts the beginning of a recovery in business travel,” he said.

“Yet corporations will still be focused on the bottom line,” he added, “and the cost-consciousness of the past two years will remain.”    

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