American Express Business Travel tracks pricing for actual airfares paid by corporate travelers on the most popular business travel routes for domestic and international travel along with paid hotel rates in key business travel markets. Following is data and corresponding trends for the first four months of 2010.
Q1 2010 BTM Highlights
Air - As airlines consolidate and change fee structures to improve financial stability, corporate buyers must re-evaluate industry developments and identify new opportunities for savings as a way to improve their overall air travel programs.
Year-Over-Year International Airfare: Increased 3%
Q1 2010 Average International Airfare Paid - $1,726
April 2010 International Airfare Paid - $1,821
Q1 2009 Average International Airfare Paid - $1,680
Year-Over-Year Domestic Airfare: Increased 6%
Q1 2010 Average Domestic Airfare Paid - $225
April 2010 Domestic Airfare Paid - $231
Q1 2009 Average Domestic Airfare Paid - $213
Percentage of Total Passengers
Historically there has been close to an even split of passengers flying businesses class versus economy for International travel. However during the heart of the recession last year – particularly in the second quarter of 2009 - the percentage of tickets booked in business class hit its lowest rate at 36%. As the trending now shows, percentage rates are on the rise, indicating travelers are moving back to the front of the plane.
Q1 2010 International Business Class – 41%
Q1 2009 International Business Class – 39%
Q1 2008 International Business Class – 51%
Hotel - Despite the modest return in business travel, hotel prices are still lagging because unlike the airlines where planes could be grounded to accommodate change in demand, the same cannot be said for a hotel. Because of this, hotel suppliers are lacking pricing power even as travelers return to the road – keeping rates low. However, as the recovery continually gains momentum, higher occupancy levels will position suppliers to begin demanding premium pricing again - and buyers should work to cultivate supplier relationships now to mitigate future price increases.
Year-Over-Year International Booked Hotel Rates: Decreased 0.5%
Q1 2010 Average International Booked Rates Paid - $228
April 2010 International Booked Rates Paid - $224
Q1 2009 Average International Booked Rates Paid - $229
Year-Over-Year Domestic Booked Hotel Rates: Decreased 5%
Q1 2010 Average Domestic Booked Rates Paid - $146
April 2010 Domestic Booked Rates Paid - $150
Q1 2009 Average Domestic Booked Rates Paid - $153
Business Travel City Destination Trends
From a European/Middle East/Africa perspective in ranking order - London, Paris, Frankfurt, Dubai, and Amsterdam were the top traveled to cities for business travelers in 2009. While the destinations have remained the same in Q1 2010 - ranking has not. In 2010, London remained in the top spot, with Frankfurt pushing into the number two spot - seeing a growth of 28% more trips - while Paris fell to number three. Interestingly, Amsterdam surpassed Dubai to take the fourth spot, as Dubai has seen 21% less trips this year.
In Asia, the top three business travel destinations remain the same between Q1 2009 and Q1 2010: Tokyo, Shanghai and Singapore. However Hong Kong was pushed out by Beijing as the fourth most popular business travel hot spot in 2010.
As the industry looks towards recovery, travel managers will need to keep a close eye on trends to make the most of their travel programs, particularly with ongoing merger and acquisition activity in the airline industry, and the unbundling of fees by hotels and airlines. Companies must be vigilant about adjusting their strategies as necessary in order to continually drive savings.