American Express: Airfare, hotels up

NEW YORK – Business travel costs substantially increased over the past two years, according to the 2006 American Express Business Travel Monitor, which tracks airfares, hotel rates and car rental fees booked by the company's corporate clients.

The increases included a rise in average domestic airfares to $231 in 2006. In contrast, in 2005, average domestic plane tickets had hit a six-year low of $216, according to American Express data.

Despite the rise last year, airfare prices began to trend downward again toward the end of 2006 because clients began more aggressively booking in advance and seeking out discount coach fares, according to Mike Streit, vice president of American Express Business Travel Advisory Services. "These are some of the strategies we encourage clients to use to help avert rising costs," he said in a statement.

International airfares increased 12.8 percent over two years, according to the data, to an average of $1,707 per ticket in 2006, up from $1,614 in 2005 and $1,514 in 2004.

""With global economies continuing to surge ahead, U.S.-based carriers expanded capacity to different regions, yet demand continued to outpace supply," said Streit. Asia continues to show the greatest demand increase regionally, particularly in China and India, according to American Express. Fares paid to this area increased 11 percent, the highest average increase in any region.

Car rentals showed a higher average daily cost as well. Prices rose 4.5 percent to $69.

But he said this is an area where "more aggressively managing car rental purchasing could be a hidden savings jewel for many companies. Those who closely manage car rental expenditures and aggressively bid their business can achieve savings in excess of 10 percent."

American Express research also showed year-over-year increases in both U.S. domestic and international booked hotel rates.

Costs for international hotel bookings ended 2006 up 8.5 percent to $230, or an extra $18 from the $212 average in 2005.

Perhaps most surprising was the increase in budget hotel rates in the U.S. The American Express data found that in four out of the past five quarters, across 34 top domestic markets, budget hotels cost more than or as much as economy hotels.

Fourth-quarter 2006 rates at budget hotels averaged $179 per night, compared to $130 in the first quarter of 2006. Economy hotels, which are considered to be a better class of accommodations than the budget hotels, averaged just $164 a night.

The budget rates were also only $10 a night lower than the average $189 charged by mid-price and upscale hotels in the fourth quarter of 2006.

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