Business Travelers Expected to Pay Less for Hotels in 2010

Coming off a year that has seen prices fall in all business travel categories, American Express forecasted that prices will rise modestly across most segments in 2010, but not U.S. hotels. In North America, AmEx said it expects mid-range hotels to see rates fall 1 percent to 4 percent while those at the upper end will see larger reductions of 3 percent to 6 percent.

AmEx said pricier hotels face greater pressure on rates because many business travelers have cut costs by buying down. Airlines can reduce capacity and thus maintain or raise prices, but hotels can’t do that, pointed out Frank Schnur, American Express’ vice president of global advisory services.

Hotels will have a hard time bringing up rates in most parts of the world, except in the Asia-Pacific region, where AmEx predicted rate increases of 1 percent to 6 percent for midscale and upscale hotels.

Globally, mid-range hotels will see rates drop 3 percent to increase 2 percent, and upper-range hotel rates will drop 4 percent to increase 1 percent, AmEx predicted. In North America, domestic airfares will rise 2 percent to 7 percent, AmEx predicted, while international fares will rise 1 percent to 6 percent.

Latin America was the only region with prospects for airfare drops, with domestic fares projected for 3 percent reductions to 2 percent gains and international fares ranging from a 1 percent drop to a 2 percent increase.

For car rentals in North America, AmEx projected relatively steady pricing, ranging from a 1 percent drop to a 2 percent increase. American Express noted that the lower ranges of pricing will likely occur at the start of the year, with higher prices in play as the year progresses.