US budget hotels among fastest-rising in business costs
All travel prices are going up but what are the fastest-rising in business travel? US budget hotels are at the top of the list.
So says the American Express Business Travel in its “2006 Business Travel Monitor.”
“In line with our predictions, capacity constraints, strong demand and high fuel costs prompted transient travel prices to climb in 2006,” said Mike Streit, vice president of American Express Business Travel Advisory Services.
Many companies heeded the warnings and looked internally to tighten policies, strengthen compliance and rein in indirect expenditures to hedge against the expected cost increases and tough negotiating environment, he added.
Costs for international hotel bookings continued to climb, ending 2006 up 8.5%, or $18 more from 2005. But the sharpest increase domestically was found within the budget-tier hotel category.
In four out of the past five quarters, across 34 top domestic markets, budget hotels cost more than or as much as economy-tier rates.
In the fourth quarter of 2006, the budget category was up 19% compared to the same quarter in 2005.
”Budget hotel rates increased to such high levels because they are trying to attract more of the business travel market,” said Mr Streit.
The end of 2005 marked a six-year low in the average airfare paid by corporate travel buyers. By the end of 2006, the average airfare jumped $15 from $216 to a three-year high of $231.
What caused the increase? The instability of fuel prices combined with record-high load factors caused airlines to increase fares throughout the year.
International airfares increased to their highest level since the Business Travel Monitor was first published in 1999. When comparing rates between 2005 and 2006, the increase was 5.8%.
‘”With global economies continuing to surge ahead, U.S.-based carriers expanded capacity to different regions, yet demand continued to outpace supply,” said Mr Streit.
American Express operates one of the world’s largest travel agency networks with over 2,200 travel service locations in over 140 countries and territories worldwide. The Company processed $21.8 billion in global travel sales in 2006.
Report by David Wilkening
David
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