Costs for business services to go up

Increased competition and low-budget airlines are
expected to keep air travel prices down.

NEW YORK (AP) — Demand for business travel services will exceed supply in 2008, driving increases in rates for airfare, hotels, car rentals and corporate meetings, according to the annual Global Business Travel Forecast from American Express.

“In 2008, we expect a domestic trip inclusive of airfare, car rental and hotel stay will increase 6 percent, or $63, bringing the average trip cost to a total of approximately $1,110,” Mike Streit, vice president and global leader for American Express Business Travel Advisory Services said in a statement.

“For an international trip, the increase is expected to be nearly 7 percent, or approximately $205, bringing the cost of an average trip to $3,171.”

In North America, American Express predicts a 1 percent to 5 percent increase in economy class airfares, a 4 percent to 7 percent increase in midrange hotel rates and a 2 percent to 4 percent increase in car rental costs.

Factors contributing to overall increases in average costs include premium pricing for airplane seats with flat beds or more legroom; heavy demand for hotels in certain U.S. cities such as New York, Washington and Chicago, where rates could rise as much as 14 percent, and more taxes and fees on car rentals, the report said.

However, the report noted that in air travel, increased competition and low-budget airlines could help keep the lid on prices.

The report also concluded that high demand and slow growth of supply for hotel rooms around the world will not only force prices up but may also lead to more minimum and maximum stay requirements, as well as instances when corporate rates do not apply.

The forecast said that companies will be increasing their focus on responsible business travel practices related to safety, security and the environment.

But the report noted that while companies may start measuring and offsetting the “carbon footprint” of their employees’ travels, carbon offsetting is likely to be a “short-term solution.”

Carbon offsets are typically payments made to offset the carbon emissions generated by travel. The payments usually support renewable energy and conservation projects.

Projections for the global forecast were based on statistical forecasting, market research, economic trends, interviews with American Express analysts and other data.