Business Travel Demand to Outpace Capacity in 2008

Demand for business travel services will again outweigh supply in 2008, driving continued increases in rates across air, hotel, car rental and corporate meetings and events according to the American Express annual Global Business Travel Forecast.

While worldwide airfares are expected to continue their climb, hotel rates are projected to experience high double-digit increases in demand-heavy markets across the U.S., Europe and Asia.

The Global Business Travel Forecast, prepared by Advisory Services, predicts that the average cost of domestic and international trips will increase.

Pricing pressures that have influenced the rise in airfares in the past are expected to continue in 2008, but more competition in certain markets should help ease increases. Fuel costs, improvements in airline inventory and pricing technology, capacity constraint and demand for long-haul are likely to drive price increases.

High demand and slow growth of supply is likely to force prices up and will impact access hoteliers give to last room availability rates. Companies may also encounter minimum and maximum stay requirements and instances when corporate rates do not apply.

Continued infusion of capital to hotels should benefit travelers through renovations and upgrades of properties and additional amenities, particularly in lower market tiers. However, these improvements will force hotels to maintain rates at historic highs.

Rising hotel rates are likely to contribute to the expected increase of 8 percent to10 percent in global meeting spend (guestrooms account for nearly half of all meeting spend, excluding airfare).