Business Travel Monitor Reveals Savings Opportunities for Air, Hotel Rates

Opportune time to analyze corporate rates to ensure they are competitive as airfare rates hit lowest point since Q2 2005 and hotel rates tick down, American Express reports.

Domestic and international airfare rates are at their lowest point since the second quarter of 2005, while hotel rates showed a modest decrease in Q2 of this year against the previous quarter, presenting significant opportunities for procurement and travel professionals to negotiate additional savings, according to North America Business Travel Monitor (BTM) data and analysis from American Express Business Travel.

The Business Travel Monitor, the industry’s pricing benchmark published by eXpert Insights, the newly created research arm of Global Advisory Services, revealed that international and domestic airfare prices decreased year-over-year in the second quarter of 2009. Mixed results are seen in hotel rates year-over-year, where rates decreased internationally and remained flat domestically.

Signs point to corporations continuing to scale back on business travel spend and frequency. In addition, airlines are switching gears and are competing heavily to gain the business of a smaller pool of business travelers.

Highlights of the Q2 BTM included:

* Average international airfares paid decreased 19 percent year-over-year;
* Average domestic airfares paid decreased 18 percent year-over-year;
* Average international booked hotel rates decreased 12 percent year-over-year, but increased 6 percent from Q1 to Q2;
* Average domestic booked hotel rates remained flat year-over-year, but decreased 2 percent from Q1 to Q2;
* Car rental rates posted slight decrease of 3 percent in Q2 2009 both from the previous quarter and the prior year.

“Despite widespread discounting and trading down in business travel, we are seeing a leveling in pricing and even an uptick in some areas in our Q2 versus Q1 data, as well as, in our monthly BTM data,” said Christa Manning, director with eXpert Insights at American Express Business Travel. “With demand still down significantly versus last year, there are many savings opportunities in the market for savvy procurement and travel management professionals. It’s a critical time for companies to have an aggressively managed business travel program to help lock in competitive rates and effectively control costs while keeping travelers on the road.”

International Airfares: According to the report, several factors led to the decrease in international airfares paid. One key factor: Companies are employing the cost saving measure of requiring travelers to use of coach class seats instead of business class. In the second quarter, 36 percent of booked travel was in business class versus 50 percent in the second quarter of 2008. Also, airlines are making lower cost fares more available as they compete internationally, and the airlines also are deepening corporate discounts on the majority of fare classes in Q2 2009.