Corporate cutbacks reduce growth of hotel room rates

5 September 2001
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06 September 2001 | David Arminas

Published promotional rates for hotel rooms may be cheaper than negotiated company rates as hotels respond to cutbacks in corporate travel budgets.

Hotels are aware that companies are insisting their employees use lower-priced, no-frills hotels, according to the latest quarterly travel index from American Express.

Price increases are slowing down: western Europe saw an increase of up to 2.3 per cent and North America up to 3.2 per cent quarter-on-quarter to June.

In the UK, hotel prices rose by 1.4 per cent from the first quarter this year. In France the rise was 4.9 per cent and in Germany it was 0.8 per cent. However, the Netherlands saw a decrease in prices of 2.6 per cent.

Within the airline sector, the survey notes that US carriers are also moving to keep their business clients. The trend is to remove restrictions, most notably the "Saturday-night rule" where travellers must stay a Saturday night at their destination to get cheap fares. European airlines are expected to follow suit in the next six to nine months, the report says.

Airlines are shifting to smaller aircraft on some routes to improve their return on investments. These planes have a small economy section and large business section, but more options to keep business clients satisfied at prices they wish to pay.

Average fare increases for restricted business-class travel in western Europe and North America are 0.3 per cent quarter-on-quarter.

Amex suggests further leveling out of transatlantic airfares in the rest of the year if the economic downturn continues.

SMsep2001

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