Business travel costs will continue to rise in 2008, according to the annual American Express Global Business Travel Forecast, which was released last week.
According to Mike Streit, vice president and global leader for American Express Business Travel Advisory Services, the average business trip (including airfare, car rental, and hotel stay) will cost $1,110 in 2008, 6 percent more than it did in 2007. International trips will increase by 7 percent to $3,171.
“Globally, three factors drove up the cost of business travel in 2007,” said Streit during a teleconference announcing the forecast’s findings. “Airlines operated at full capacity, the price of oil continued to rise, and hotels remained at record-high occupancy levels. In 2008 … these again will be the leading pressures causing fares and rates to increase.”
Costs are expected to rise across the board, with North American hotel rates increasing in midrange properties by 4 percent to 7 percent, and in upper-range hotels by 5 percent to 8 percent. Expected increases in Europe are even higher at 12 percent to 14 percent in both categories. Airfares within the United States are expected to increase by 1 percent to 5 percent, while international business fares from the United States are predicted to rise by 5 percent to 10 percent.
Consequently, the price of putting on a meeting should increase appreciably, according to Chris Wilkes, meetings management advisory services practice leader. Meeting spend will rise by 8 percent to 10 percent in 2008, continuing a trend that contributed to American Express clients spend 34 percent more per meeting in the first half of 2007 than they did in 2006.
While hotel room rates accounted for a substantial amount of the increased spending on meetings, “another reason for the dramatic change is company behavior,” said Wilkes. “By that I mean the nature of the meeting changed from last year to this year. How it changed varied by company. For some companies it meant traveling for longer periods of time, for others it meant including more attendees. Either of these will very quickly drive up total costs.”
More spending on meetings also means, Wilkes said, that companies are looking at meetings “as opportunities for increased oversight as costs go up.” And while the trend of consolidating meeting spend continues within the U.S. and is beginning to “gain traction” in Europe, Wilkes said, “companies for the most part are still not fully managing their meetings.
“If these companies are providing any oversight of events, typically they are very large, high-profile events,” said Wilkes, adding that companies are beginning to understand that smaller meetings represent a substantial part of a company’s meeting spend and need to be scrutinized more closely.