Cost of travel will jump in 2007

Travelers on a budget, brace yourselves. The American Express annual Global Business Travel Forecast released last week predicts higher prices for airfares, rental cars and hotels in 2007.

Amid heavy demand and minimal new building in hot markets, hotel rates may see the most dramatic increases, particularly in key business destinations like New York. Priscilla Campbell, who focuses on hotels for American Express, said room rates there could jump 18 percent next year. "In Asia-Pacific, we could see hotel rates rise up to 25 percent,'' she said Thursday during a conference call. "Occupancy levels are still at a record high; room supply still remains subpar.'' 

Overall, U.S. hotel rates will rise two to eight percent next year. Domestic air fares will climb three to five percent under continuing pressure from high oil prices, and car rental prices will jump four to six percent on higher auto purchasing prices and interest rate increases.

"It's a sellers' environment,'' said Mike Streit, global leader for American Express's advisory services unit. "We've seen a substantial shift in our clients' perception of how to be successful.'' In the new, pricier environment, business travelers can expect their employers to be more picky about staying within strict travel expense guidelines. More companies will also be looking at all trips to determine how necessary they are. And the scrutiny will extend to health and security issues relative to both international and domestic trips.

That won't necessarily result in less travel, however. "In some situations, we've seen clients move to more liberal spending on travel in areas like consulting, where employees are their greatest asset and comfort and security are important,'' said Streit.

Have you noticed a change in your company's travel policies? Are they tightening expense rules? Let us know. Write to: Barbara Correa at bboydstoncorrea@hotmail.com.