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Business Airfare, Hotel Rates Seen Rising

by MarketingCharts staff
Business Airfare, Hotel Rates Seen Rising
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Asia Prices Have Highest Growth Potential
Based on continued economic growth, increased demand, and constrained capacity, American Express expects airfare and hotel rates to grow up to 10% in 2011, effectively bringing prices back to pre-recession levels. Asia is expected to lead pricing increases up to 10%, with established Western economies seeing less pricing expansion up to 6%.

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US, Canada Slightly Differ in Expected Price Hikes
As a whole, American Express research indicates North America has already experienced a significant rise in rates in 2010 with domestic airfares up 39% for business class and 21% for economy short-haul; therefore only modest increases in airfare rates are expected for 2011.
Breaking North America down by region, the US is expected to have slightly higher price increases in domestic/short-haul economy class flights and international/long-haul business class flights. However, Canada is expected to have slightly higher price increases in mid-range and upper-range hotel rates.

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Meanwhile, car rental rates are projected to be flat or decline in 2011 by up to 2% resulting from strong competition in the industry coming out of the recession and excess inventory. However, American Express advises higher cancellation charges and new taxes and fees could drive the actual price per trip higher.

Meetings Go Local, High-Tech
American Express predicts companies will likely increase spending and frequency of meetings, however they will likely spend less per meeting on average as meeting size decreases and sourcing efficiencies increase.

Aligning with this prediction, more meetings are expected to be held on local or regional levels, and will continue to have fewer amenities, with audio/visual services being the only exception. As planners incorporate virtual alternatives and supplements to face-to-face experiences, investments in these technologies are expected to continue to go up.

Overall Airline Satisfaction Hits 3-Year High
Among passengers who flew on a major North American airline between April 2009 and April 2010, overall customer satisfaction has improved to a three-year high of 673 on a 1,000-point scale, improving by 15 points from 2009. J.D. Power & Associates analysis indicates the improvements in the 2010 study were driven by increases in satisfaction with cost and fees and in-flight services.

The study also suggests that while passengers may dislike add-on fees, they are gradually starting to accept them. In turn, those fees may be having a less pronounced impact on satisfaction as passengers recalibrate their expectations.

About the Data: The 2011 Forecast is based on a number of primary data sources, including proprietary data from the American Express Business Travel Monitor, the American Express contracted rates database, aggregate transaction reports, and outside licensed data sources including Smith Travel Research (STR) Global Hotel Reviews and National Business Travel Association (NBTA) research on travel expenditures.