NEW YORK -- Corporate room rates are expected to rise 13% to 15%
this year to about $161, according to American Express Trends and
Forecasts for the Business Travel Industry.
The company said the boost will help drive an increase of 6% to
7% in business travel costs.
Michael Barry, director of American Express' consulting services
group, said that, with demand high, hotel companies are being
fairly "inflexible" about discounts and room availability during
negotiations with corporate customers. "Any company that wants to
be taken seriously when they go to the negotiating table needs to
come with a proper amount of data that shows where they spend the
money and a policy that shows they can move business," Barry
said.
Business air fares will rise about 5% to 6% over 1997, pushing
the typical business fare to $901, the report predicted.
Car rental rates will rise 4% to 5% over last year, to about $50
a day, as car rental firms try to improve profitability.
Restaurant prices will increase by only 2% to 3%, it said.
American Express in September predicted that overall business
travel costs would increase 3% to 5% in 1998; however, the
increased hotel occupancies led to a revised forecast.
The increases are driven largely by strong occupancy rates in
key business cities such as New York, Boston, San Francisco and Los
Angeles.
Passenger demand for air travel is expected to drop almost a
full percentage point from 1997 levels, to 4.5%. American Express
said the rate of demand growth will outpace additional seat
capacity.