Hotel rates start to increase again, according to Amex

December 18, 2009 | Hospitality Industry

American Express Business Travel released third quarter data and analysis from its Business Travel Monitor North America. Modest airfare increases were seen. Hotel rates continue to decrease in upscale categories, but increase in mid-price, economy and budget tiers.

American Express Business Travel, a global leader in business travel management, released third quarter data and analysis from its Business Travel Monitor (BTM) North America. Modest airfare increases were seen and travelers appear to be moving back to the front of the plane, showing positive signs companies may likely be feeling more optimistic about the economy.

The BTM is published by eXpert insights, American Express Business Travel’s research practice of Global Advisory Services. The BTM is a monthly pricing index tracking actual airfares paid on the most popular business travel routes for domestic and international travel compared to published prices. It also tracks paid hotel and car rates in key business travel markets.

Highlights of the Q3 BTM include the following:

International and domestic airfares paid from North America increased quarter-over-quarter, where as year-over-year airfares continue to be down. From a hotel perspective, rates varied across hotel categories quarter-over-quarter, but overall average rates decreased both internationally and domestically. In looking at individual hotel tiers, rate increases were evident in budget, economy and mid-tier categories.

- Average international airfares paid increased two percent quarter-over-quarter
- Average domestic airfares paid increased two percent quarter-over-quarter
- Average international booked hotel rates decreased 10 percent year-over-year
- Average domestic booked hotel rates decreased two percent year-over-year, but increased seven percent in budget-tier hotels quarter-over-quarter
- Car rental rates increased five percent in Q3 2009 and remained flat year-over-year

“While economists watch key market indicators such as inventory levels and unemployment, we may be seeing a glimmer of economic hope as the Business Travel Monitor data shows modest fare increases and travelers moving to the front of the plane again,” said Christa Degnan Manning, director, eXpert insights, Global Advisory Services, American Express Business Travel. “This is an encouraging sign for the business travel industry because it indicates increasing demand as well as willingness to pay for premium products, which help with supplier profitability and their ability to provide consumer discounts.”

Airfare
Continued Manning, “Pent-up trip demand coupled with supply base changes have caused rates to slightly increase in the third quarter. There has also been a slight increase in the usage of business class tickets for international travel, up one percent from last quarter, to 37%. However, this is still down year-over-year from 49% of all international business traveler tickets purchased.”

Hotel Rates
Continued drop in demand has impacted both international and domestic hotel bookings. Manning added, “Since hotels can not reduce capacity as easily as air or ground transport providers, this drives rates down, and the effect will likely continue through the first half of 2010. However signs point to an increase in demand from the bottom up, where rates have notably increased up to seven percent in lower hotel tiers, driven by a positive up-tick in demand from travelers wanting to travel, yet doing so more cost-consciously.”

The American Express Business Travel Monitor is a key deliverable of American Express Business Travel Global Advisory Services’ Research practice eXpert insights. It benchmarks the average prices paid by business travelers for air, hotel, and car rental service by major cities and classes of service through aggregate analysis of American Express’ extensive global database of travel booking and payment information.

Average booked hotel rates, both international and domestic, represent the total spending of all American Express Business Travel clients, excluding taxes, divided by the total number of room nights confirmed.