American Express Global Business Travel released business travel pricing trends for the second quarter of 2011 from its eXpert insights Business Travel Monitor (BTM), its long-term price trending index for domestic and international trips originating in North America. The BTM data demonstrates continued rate increases for flights and accommodations as suppliers continue to take advantage of the return in demand and other market factors to raise rates.
According to the BTM data. the average domestic one-way airfare increased by 8 percent to $260 in Q2 2011 over the same period the year before, while average international one-way fare increased by 9 percent to $1,970. Average hotel rates in Q2 2011 increased by 3 percent to $156 over the same period in 2010, while international hotels increased by 11 percent to $258.
According to the data, tickets for both domestic and international flights have been consistently higher for companies throughout 2011 compared to each respective month in 2010. Having passed the pre-recession pricing levels last quarter, airfares have continued to rise. The year-to-date average fare increase has slowed the last two months, however, suggesting that fares may be stabilizing.
“With the on-going supplier consolidation and alliance activity around the world and more businesses looking to aggressively channel volume with fewer suppliers, airlines have a more complete view of supply and demand than ever before and have used this information to determine pricing very effectively this year,” said Christa Degnan Manning, director, eXpert insights research, Advisory Services, American Express Global Business Travel. “Additionally, to some extent they have been able to raise rates in response to increasing energy costs to try to protect the recent profit margins the industry has generated.”
Recovery in the hospitality industry continues with many companies paying more for their travelers to book accommodations, she added.
“As hotel new development pipeline slowed with the uncertainty in the economy, hoteliers have benefited from more favorable demand to supply ratios by and large in 2011,” Manning said. “In addition, many hoteliers have renewed focus on the business traveler as this more lucrative sector of travel has picked up.
"As hotel market pricing is always about location, location, location, the recovery for certain areas has been particularly strong driving hotel rates in recently popular destinations up much more rapidly,” she continued. “Travel buyers will need to rely heavily on volume and the ability to deliver market share to secure competitive rates in these regions, while meeting planners will want to evaluate multiple destinations to avoid the biggest price increases in cost per attendee per day next year.”
