American Express Business Travel: Business travel fares and rates approaching pre-recession levels

Notably, data from the Q3 BTM reveals pricing power is shifting into the hands of suppliers as both international and domestic airfares and domestic hotel rates increased in year-over-year in Q3 2010.

"During the past quarter we've witnessed a distinct shift from a buyers' market to a suppliers' market leading to higher prices across several travel categories including airfare and hotel rates," said Christa Degnan Manning, director, eXpert insights research, Global Advisory Services, American Express Business Travel. "Airlines have been especially successful in constraining capacity and increasing fares to create more sustainable financial stability. This should prompt companies to revise travel cost-control tactics, identify new opportunities for travel return on investment, and ultimately change traveler behavior in response to the new increased price environment."

With airlines exerting greater control over prices, business travelers have seen a third quarter year-over-year increase of six percent in average North American domestic airfare paid and a third quarter year-over-year increase of eight percent in average international airfare paid.

Highlights from the Q3 2010 BTM year-over-year comparisons:

Year-Over-Year Average Domestic Airfare Paid Increased Six Percent:

• Q3 2007 -- $231
• Q3 2008 - $253
• Q3 2009 - $215
• Q3 2010 - $228

Year-Over-Year Average International Airfare Paid Increased Eight Percent:

• Q3 2007 -- $1,853
• Q3 2008 - $2,010
• Q3 2009 - $1,638
• Q3 2010 - $1,781

Hotel Rates Rebounding

"Hotel rates have lagged behind the airline pricing rebound as savvy travel category sourcing professionals locked in lower prices at the end of 2009 based on on-going economic anxiety in the hotel community, but as business travelers headed back on the road hoteliers have been able to make marginal increases this year. Rates appear to be on a consistent rise domestically in the US, and an increase in hotel closures and a drop-off in the hotel construction pipeline due to the Great Recession will put some constraints on capacity moving forward. As such, companies need to evaluate the competitiveness of their rates across their top markets and identify opportunities during this negotiation season to avoid likely expected rate increases across the board in all tiers of properties," continued Manning. "Global Advisory Services has already seen an average increase of more than 7% in corporate rates worldwide this year for 2011 business travelers."

Year-Over-Year Average Domestic Hotel Booked Rates Paid Increased Three Percent:

• Q3 2007 - $146
• Q3 2008 - $147
• Q3 2009 - $144
• Q3 2010 - $148

Year-Over-Year Average International Hotel Booked Rates Paid:

• Q3 2007 - $256
• Q3 2008 - $266
• Q3 2009 - $239
• Q3 2010 - $238

U.S. Cities with Highest Year-Over-Year Hotel Rate Increases