It looks like the increase in airfares in January 2011 is only the beginning.
After climbing 7 percent in 2010, airfares were on their way up again in January, according to American Express Business Travel’s Business Travel Monitor. And it looks like that’s only the beginning.
The average airfare was $231 for domestic flights at year’s end, just 6 percent shy of 2008 highs. “With oil prices rising, airlines are looking to cut their capacity growth plans to combat higher fuel costs,” said Christa Degnan Manning, director, Global Advisory Services, American Express Business Travel. “As a result, increases in airfares are likely to remain on an upward trend in 2011,” she said. The January 2011 numbers, for example, were 8 percent higher than those in January 2010.
Domestic hotel rates remained flat in 2010 compared to the previous year, but rose in the fourth quarter—a sign that further increases are on the way this year. For example, rates rose 12 percent in Las Vegas in the fourth quarter, and 5 percent in New York City, Washington, D.C., San Francisco, and Denver.
“2010 marked the first year since the recession’s impact took hold in 2008 that there hasn’t been a decline in domestic hotel rates, showing the hotel industry is on the rebound. We have already seen some hotels begin to raise their rates, especially in light of limited hotel development in the pipeline for 2011, finally putting hoteliers on stronger footing in the supply and demand equation,” said Manning.
Projected rate increases in 2011 reflect expectations that business travel will rebound this year. “Companies began to re-invest in travel following improvements in the economy and are looking to seize opportunities to drive growth,” Manning said. For meeting planners, negotiating on rate will be tougher; she recommends looking for volume discount with hotels by driving spend to fewer properties and negotiating key amenities in their rates to help alleviate dramatic increases.
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