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4-Traders Homepage  >  Equities  >  Nyse  >  American Express Company    AXP

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AMEXCO : Business Travel Fares and Rates Approaching Pre-Recession Levels

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12/16/2010 | 07:05pm CEST

American Express Business Travel, a global industry leader in business travel management, today 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 in 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.

Highlights from the Q3 2010 BTM year-over-year comparisons:

Year-Over-Year Average Domestic Airfare Paid Increased Six Percent:

  • Q3 2007 -- $231
  • Q3 2008 – $253
  • Q3 2009 – $215
  • Q3 2010 – $228

Year-Over-Year Average International Airfare Paid Increased Eight Percent:

  • Q3 2007 -- $1,853
  • Q3 2008 – $2,010
  • Q3 2009 – $1,638
  • Q3 2010 – $1,781

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 this year. 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.?

Year-Over-Year Average Domestic Hotel Booked Rates Paid Increased Three Percent:

  • Q3 2007 – $146
  • Q3 2008 – $147
  • Q3 2009 – $144
  • Q3 2010 – $148

Year-Over-Year Average International Hotel Booked Rates Paid:

  • Q3 2007 – $256
  • Q3 2008 – $266
  • Q3 2009 – $239
  • Q3 2010 – $238

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%

About the American Express Business Travel Monitor, North America

The American Express Business Travel Monitor is a key deliverable of American Express 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 BTM 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 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 Business Travel clients, excluding taxes, divided by the total number of room nights confirmed. The full BTM 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 Business Travel customer base.

About American Express Business Travel

American Express Business Travel (www.americanexpress.com/businesstravel), a division of American Express Company, is committed to helping its clients maximize the return on their travel investment through increased cost savings, world-class customer service and greater spending control. With clients ranging from small businesses to multinational corporations, American Express Business Travel provides a combination of industry-leading technology, travel management consulting, strategic sourcing and supplier negotiation support, alongside global customer service available online and offline. The Company also provides a dynamic online community (www.businesstravelconneXion.com) harnessing the collective intelligence of those in the business travel industry offering a variety of perspectives, best practices, current research and industry news.

American Express operates one of the world's largest travel agency networks with locations in over 140 countries worldwide. Total travel sales volume in 2009 was $21.5 billion, including proprietary volume, volume processed through joint ventures, and American Express branded volume processed through its 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. Learn more at www.americanexpress.com and connect with us on www.facebook.com/americanexpress, www.twitter.com/americanexpress and www.youtube.com/americanexpress.

For American Express
Erica Rose, 212-640-2265
erica.k.rose@aexp.com
or
Sarah Hawkins, 212-446-1890
shawkins@sloanepr.com


© Business Wire 2010
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