Business Travel Costs Headed Higher

If you’re a business traveler, or someone who pays the bills for keeping employees on the road, prepare yourself for more of the same type of cost increases in 1996 that you’ve been enduring this year.

Most expenses for business travel, including air fares, hotel-room and car-rental rates, have risen steadily in 1995, fueled by the strong demand that usually accompanies a healthy economy.

According to several consulting firms that measure travel costs, restaurant meals are about the only cost that has shown little or no increase in 1995. Car-rental rates, after not growing at all for several years, jumped as much as 15 percent in some cities. Hotel prices are up 5 or 6 percent around the country, and air fares typically paid by business travelers are up about 5 percent.

The gurus at American Express’s travel-management unit, in their annual industry trends survey, last week predicted that business travel prices would rise 3 to 4 percent in 1996. Another major forecaster, Runzheimer International, earlier this year forecast a 5.2 percent increase.

Looking at particulars, the Amex survey found that the average cost of an air ticket for business travel is expected to rise about 3 to 4 percent in 1996. Discount fares that business travelers can use - usually those that don’t require a Saturday-night stay away from home - will probably be harder to find because of a steady increase in what the airlines call “load factor,” or the average number of available seats that are filled with paying passengers.

The industrywide load factor is expected to be a record-high 67 percent by the end of 1995, Amex said.

The American Express survey predicted that at hotels, the average rate business travelers pay is expected to go up 5 or 6 percent from 1995 to 1996, and occupancy for hotels nationwide is expected to be a healthy 67 percent. Hotels are benefiting these days from the fact that few new lodgings have opened in the United States the last three years, mostly because of an overbuilding spree in the late 1980s and early 1990s.

The Amex survey found that car-rental prices will again outpace inflation next year, increasing about 4 to 5 percent. Rates are being driven in part by rental companies reducing the size of their fleets, which enables them to command more money for the cars they have available.

“The only break business travelers will encounter in the coming year is in the meal category, as independent restaurants and chains battle it out in a fiercely competitive market with price increases of only 2 to 3 percent,” Amex said in the survey.