T&E price tag set to fly higher in ’08

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By Tara Kalwarski

October 29, 2007 ET

The average cost for a domestic business trip will top $1,110 in 2008—a 6% bump that reflects higher airline, car rental and hotel prices. And a biz jaunt overseas should increase 6.9%, to $3,171. That’s according to American Express’ annual global business travel forecast. The company, which processed some $22 billion in global T&E last year, said the big ’08 increases (up from a 4.5% domestic rise forecasted for ’07) are due to business travel demand continuing to outstrip supply. Here’s what to expect on the T&E front.

Air Travel ▲ 1% to 10%

Steeper fuel prices, heavier demand, and increasingly sophisticated airline fleet-management tactics will push ticket prices up as much as 10% for business class international flights. Yet short-haul, economy-class flights will rise as little as 1%. Also helping to temper prices: A new U.S.-EU “open skies” accord that allows all U.S. carriers to fly to every city in the EU, and vice versa.

Car Rentals ▲ 1% to 4%

Although car rental outlets will likely up rates by 2% to 4% domestically and 1% to 3% abroad, watch out for local rental taxes and fees that could add up on business travelers’ expense accounts.

Hotels ▲ 4% to 41%

In the U.S., plan for total hotel costs rising 4% to 8%. Also: more and more hotels are choosing not to honor corporate rates. Overseas, the weak dollar plays a role. So does strong demand: Occupancy rates exceeding 80% in London could push up mid-range hotel prices by 19% to 22% and high-end digs by 21% to 24%. Hotel costs in Europe are expected to increase 12% to 14% on average; in Beijing (home of the 2008 Olympics), 18% to 22%, and in India as much as 41%.

Corporate Meetings and Events ▲ 8% to 10%

AmEx suggests meetings as a spending category for savings, as prices in this category could surge as much as 8% to 10%. About half of all meeting spending goes to hotel bills.

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