Business Travel Costs Increase

Strong demand and increased operating costs cause rise.

Business travel costs increased in 2006 after several years of flat or declining prices, a survey by American Express showed March 26. The financial firm's Business Travel Monitor showed an increase in prices for airline, hotel and car rental rates, largely due to strong demand and increased operating costs.

The most dramatic increases were seen in international airfares, and certain hotel categories, the report found.

U.S. domestic airfares rose $15 to an average of $216 in 2006, ending four years of declines. Meanwhile the average international airfare rose to $1,707, up 5.8% for the year and 12.8% over the past two years.

American Express said the increases came even as companies tried to better manage costs. "In line with our predictions, capacity constraints, strong demand and high fuel costs prompted transient travel prices to climb in 2006," said Mike Streit, vice president of American Express Business Travel Advisory Services. "Companies, however, heeded the warnings and looked internally to tighten policies, strengthen compliance and rein in indirect expenditures to hedge against the expected cost increases and challenging negotiating environment.

Airfares to Asia showed strong increases, particularly for China and India. Fares paid to this area increased 11%, the highest average increase in any region.

Costs for international hotel bookings continued to climb, ending 2006 up 8.5%, or $18 from the prior year at $230.

U.S. hotel prices were higher across the board with the budget category increasing to $179 on average in 2006 from $166 and deluxe accommodations rising $22 to an average of $233. Car rental costs are also on the way up: The average daily rate increased to $69 last year from $66 in 2005, reflecting higher auto prices.

Copyright Agence France-Presse, 2007

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