The new Business Travel Monitor (BTM) North America for third quarter 2010, produced by American Express Business Travel, shows that price increases are holding steady as business travel continues to rebound. It also shows that pricing power is shifting into the hands of suppliers as both international and U.S. airfares and U.S. hotel rates increased year-over-year.
"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."
The BTM found that with airlines exerting greater control over prices, business travelers have seen a third quarter year-over-year increase of 6 percent in average North American domestic airfare paid and a third quarter year-over-year increase of 8 percent in average international airfare paid.
"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 ongoing 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 U.S., 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," Manning said. "Global Advisory Services has already seen an average increase of more than 7 percent in corporate rates worldwide this year for 2011 business travelers."