American Express predicts hike in business travel for 2012

Corporates looking to send their staff travelling next year should prepare for a hike in prices, according to the new American Express Global Business Travel Global Forecast.

The report says businesses intend to support growth by doing more travelling next year and this, combined with clever supply management by travel providers, means higher prices.

Prices will rise more subtly across Europe and North Africa, while higher increases in the cost of business travel are predicted for Asia and Latin America as travel demand within and to these areas is strongest.

The forecast, which has been produced for more than two decades, includes more than 2,200 individual predictions, including 136 air pricing predictions globally by type of flight and class of service; 932 country, regional, and city hotel rate predictions by mid-tier, upper tier, and overall property averages and 35 country and regional ground transportation predictions on base rates and average daily rates expected to be paid worldwide next year.

Director of EXPERT INSIGHTS research at American Express Global Business Travel Christa Degnan Manning  said: “The travel industry remains a complex and ever-changing marketplace as it seeks to regain both pre-recession pricing and profitability levels in the face of economic anxiety.

“As business travel is both an essential part of global economic performance as well as an enabler of business growth, we expect the combination of demand and effective travel supplier yield management to likely push rates business travelers pay up across the board in 2012.”

For North America, American Express predicts “steadfast capacity restrictions” by suppliers will boost airline fares despite a potential economic slowdown which will mean average low to middle single-digit growth in contracted rates for business next year.

It adds that travellers are set to see the biggest increases in business class fares as suppliers exploit companies’ desires to recover from the recession by travelling to seek new business.

The Asia Pacific region is expected to lead in business travel demand and airfares expected to increase significantly on top of quite large leaps already this year.

American Express predicts short haul economy prices will rise by up to 5% while long haul business fares will go up by between 6% and 10%.

Said Manning:  “Overall the Asian market appears to be poised to continue on its growth track, and business travel activity is expected to remain strong as companies within the region and across the world send travellers there to capitalize on its economic expansion.

“Accordingly, airfare in Asia Pacific is generally expected to rise next year, especially for long-haul flights.”

by Dinah Hatch