Corporate Travel Costs Are To Grow

Business travelers can expect to pay more next year to fly, eat, rent a car and for lodging.

And they’ll have more company out there on the road, too, as an improving economy leads to the loosening of corporate travel budgets, which will push up market demand and lead to the higher prices.

“The increase in business travel, while good for the economy, could allow travel suppliers to regain pricing power and increase travel costs,” the National Business Travel Association stated in its recently released annual cost forecast.

“These rate increases will come in an environment in which corporations are no longer restricting travel as they have in recent years.”

The association, representing more than 2,500 corporate travel managers and service providers, projects an overall 7 percent increase in 2005 in the cost of business travel.

Leading the way are hotel rates, which are projected to increase 7.5 percent next year over 2004.

The association cited the growing demand for room nights that outpaces growth in available rooms and an upgrade in amenities offered to business travelers with putting pressure on prices.

Air travels costs will increase an average of 5 percent, as airlines bump up prices because of high fuel and labor costs. Even low-cost air carriers are not immune from the same kind of cost problems facing so-called “legacy” carriers, the Business Travel Association said.

“In this environment, and with fuel prices expected to continue increasing in 2005, airlines will continue to work to contain costs and to establish profitable fare structures,” the association stated.

Rising demand will push the cost to rent a car 5 percent higher next year and contribute to a projected 3 percent increase in the cost of meals, according to the association’s annual cost forecast that was released Oct. 27.

The increased demand for travel stems from the improving economy, improved efficiencies gained during the economic downturn, and the waning of post-9/11 security concerns, the Business Travel Association said. As conditions improve, many corporations are easing or lifting travel restrictions that were in place for the last three years.

The Travel Industry Association of America, in a forecast that was issued at the end of October, projects business travel to grow 4 percent in 2004 over last year. U.S. residents will take more than 144 million business trips this year.

Business travel will further rebound by 3.6 percent in 2005, according to the Travel Industry Association’s forecast, with 149 million business trips taken.

The annual volume increase in 2004 will represent the first since the Sept. 11, 2001, terror attacks that, combined with the economy, led to sharp declines in business travel.