American Express Business Travel Announces Adjusted Results of Forecast in Anticipation of Global Economic Slowdown



    
     - Potential Decreases in the Cost of Airfares Likely; Prices Could
    Move from -3 per cent to 5 per cent for Domestic Air Travel in Canada -
       - Hotel Occupancy is Expected to Decline and Hold Rates Steady -
    

    MARKHAM, ON, Oct. 22 /CNW/ - American Express Business Travel today
published its annual Global Business Travel Forecast and Trends report.
Originally slated for release in September, the American Express Advisory
Services department responsible for producing the report delayed its release
in order to evaluate the impact of market activities that have occurred over
the last 30 days. In the past weeks, modifications were made to reflect the
potential impact of the anticipated global economic slowdown. In certain
markets, the Forecast predicts a negative increase in 2009 to airfares and
hotel rates. Both suppliers and buyers of travel and related services are
expected to face new operating challenges in the coming year.
    "Based on forecasted economic conditions for 2009 and the substantial
increase in fares already experienced in 2008, it is possible that airfares in
2009 may decrease," said Lyell Farquharson, Vice President and General
Manager, Business Travel Canada, American Express. "However, this doesn't
necessarily correlate to a decrease in prices paid as airlines continue their
pursuit of expanding the suite of fees charged for services such as in-flight
meals and baggage. In this difficult economic environment, successful T&E
management strategies will be based upon the total cost of a business trip,
which takes into consideration costs such as parking fees, airline fees, meals
and other related expenses."

    
    Global Business Travel Forecast
    -------------------------------
    Farquharson continued, "Considering airfare, car rental and hotel stay, we
expect the average domestic trip to increase 2.8 percent, or $31 USD, to a
total of approximately $1139 USD. An increase of 4.3 per cent, or
approximately $147 USD, is expected for international trips to bring the
average cost to $3556. However, if you include the costs of additional travel
expenses including baggage fees, dining, airport parking and even package
shipping, it can add an estimated $400 to the total trip cost."

    -------------------------------------------------------------------------
    Global - 2009 Forecasted Increases
    -------------------------------------------------------------------------
    Region       Airfares                            Hotel Rates
    -------------------------------------------------------------------------
                 Domestic/         International/   Mid-Range    Upper-Range
                 Short-Haul        Long-Haul
                 (Economy Class)  (Business Class)
    -------------------------------------------------------------------------
    North
     America     (-3)% to 5%       1% to 6%        (-1)% to 6%  (-2)% to 4.5%
    -------------------------------------------------------------------------
    Europe        0% to 4%         1% to 9%         0% to 6.5%   0% to 5%
    -------------------------------------------------------------------------
    LAC           3% to 5%         2% to 4%         4% to 6%     3% to 7%
    -------------------------------------------------------------------------
    Global       (-1)% to 5%       2% to 7%        (-1)% to 6%  (-2)% to 5%
    -------------------------------------------------------------------------
    

    Global Airfare Forecast

    The proliferation of new fees and a delicate supply and demand balancing
act will determine whether airfares remain steady, increase or potentially
decrease compared to 2008.
    "In response to the record energy prices in 2008, many airlines began
charging fees for different services such as checked luggage, in-flight
refreshments and aisle seating. To help mitigate the impact of these new
charges, which can increase air travel costs up to an additional 15 per cent
per trip, we advise companies to consider increasing their focus on demand
management to ensure planned trips meet the guidelines designed to promote the
most effective use of their business investment," continued Farquharson.

    
    -   Capacity cuts are likely to lead to a shortage of available seats at
        lower price points, while changes in ticketing and minimum-stay
        requirements, uncertainty surrounding the future price of jet fuel,
        movement in airline consolidation and alliances and tighter controls
        over contract performance measurement are likely to drive price
        increases.
    -   Prices are predicted to experience downward pressure due to a slowing
        global economy, improved demand management by corporations and
        stronger traveller compliance. The expansion of low-cost carriers,
        more efficient aircraft and airline operations and the continued
        liberalization of the industry are also expected to mitigate
        increases.

    Global Hotel Rate Forecast

    Although American Express Business Travel forecasts some rate growth in
the global hotel industry, most regions will likely experience declines in
occupancy, which will keep rate increases below the level of those seen in
2008.

    -   The record oil prices that began in 2008 are expected to continue to
        impact the hotel industry and airline capacity cuts should drive down
        demand in some markets.
    -   As new hotels expand global supply and demand decreases in some
        markets, travel buyers should have increased bargaining power for
        2009 rates.

    Strategic Meeting Management Forecast

    As economic conditions continue to draw attention to meetings as a source
for savings, senior business leaders are expected to seek further visibility
into meetings spending and aim to measure the return on investment of meetings
and events for their companies.

    -   Effective demand management tactics and a movement toward shorter
        events in more local destinations should help corporations achieve
        the best return on investment.
    -   Implementing and managing meetings policy is expected to provide
        companies the ability to drive certain cost-saving behaviors. Based
        on a recent survey of American Express clients, over 70 per cent of
        companies do not have a stand alone meetings policy.
    -   Technology developments offer cost-effective ways to supplement
        meetings and events schedules. Teleconferencing and social networking
        sites are gaining popularity as tools to strengthen the interpersonal
        relationships created through traditional meetings.
    -   Leveraging transient hotel programs with a meetings hotel program is
        expected to enable companies to have visibility in both areas and
        drive savings. Negotiating packages for the preferred properties will
        likely simplify the process to drive and support compliance.

    Cost Containment Strategies for 2009

    Companies across the globe are seeking new ways to manage their travel
investments and maximize the value of their T&E programs.

    -   Companies should revisit their travel policies to ensure that
        travellers have a comprehensive guide to navigate the current travel
        environment.
    -   In addition to a tight travel policy, demand management and an
        increased focus on traveller compliance can deliver savings.
    -   Benchmarking that is based on average segment cost or average ticket
        price is no longer sufficient due to the expansion of airline fees.
        Companies should benchmark the entire cost of a trip in an effort to
        minimize expenditures related to business travel.

    Air/Hotel/Car Forecast and Trends for North America

    The expected global economic slowdown may lead to a slowing growth of
demand for available seats on a plane, and when coupled with the unbundling of
airline service fees from base fares, it is likely that in North America, a
decrease in airfares could occur.

    -------------------------------------------------------------------------
    North America - 2009 Forecasted Increases
    -------------------------------------------------------------------------
    Region       Airfares                      Hotel Rates       Car Rental
    -------------------------------------------------------------------------
                 Domestic/    International/   Mid-      Upper-
                 Short-Haul   Long-Haul        Range     Range
                 (Economy     (Business
                 Class)       Class)
    -------------------------------------------------------------------------
    United
     States      (-5)% to 5%  1% to 6%       (-1)% to   (-2)% to    (-2)% to
                                                5.5%      4.5%         3%
    -------------------------------------------------------------------------
    Canada       (-3)% to 5%  3% to 8%         2% to     1% to       0% to
                                                 7%        5%          3%
    -------------------------------------------------------------------------
    North
     America     (-3)% to 5%  1% to 6%       (-1)% to   (-2)% to    (-2)% to
                                                 6%        4.5%        3%
    -------------------------------------------------------------------------

    -   Factors that could drive increases:
        -  Air: In keeping with global trends, the North American segment
           will likely see reduced capacity, increased ticketing
           restrictions, menu-based pricing (especially in the U.S. market)
           and stricter contract enforcement.
        -  Hotel: Demand for hotel rooms in key U.S. cities will likely
           continue to put upward pressure on rates.
        -  Car: Rental taxes and higher fuel prices may add to the strain on
           rental car budgets.

    -   Pressures that could mitigate increases:
        -  Air: Reduced demand, potentially falling fuel prices and efforts
           by companies to gain greater policy compliance and demand
           management will likely help keep costs down.
        -  Hotel: As the pendulum swings toward a buyer's market, slowing
           domestic demand and occupancy rates (which could be offset by
           increases in international demand) coupled with increased
           inventory and tighter restrictions from corporations could
           moderate fare increases.
        -  Car Rental: Competition will help to moderate any increase in the
           cost of a car rental, while an anticipated increase in demand,
           which is expected to be led by corporations directing employees to
           car rentals instead of using their personal vehicles, will add
           pressure to increase the cost of a rental.
    

    Forecast Methodology

    Projections were based on a combination of statistical forecasting,
in-depth research of supplier markets, regional economic trends, interviews
with American Express industry analysts, and analyses of reports generated
within and outside American Express. Smith Travel Research was also utilized
for hotel research into specific markets and trends.
    The forecasts and projections provided in the report are based on
information gathered from a number of different internal and external sources
and no representation or warranty is made as to the accuracy of the forecasts
or projections made herein. In addition, actual changes in business travel
costs could vary significantly from forecasted data, particularly as a result
of unforeseen future political, economic and/or environmental events.
    All ranges represent forecasted year-over-year increases.

    About American Express Business Travel

    American Express Business Travel
(www.americanexpress.com/businesstravel), a division of the American Express
Company, is dedicated to helping its clients realize the greatest possible
value from their investment in travel through increased cost savings,
outstanding customer service and greater spend control. For small businesses,
medium-sized enterprises and multinational corporations, American Express
Business Travel provides a combination of industry-leading booking technology,
travel management consulting expertise, strategic sourcing and supplier
negotiation support, and customer service available online and offline, around
the world.

    About American Express in Canada

    American Express in Canada operates as Amex Bank of Canada and Amex
Canada Inc. Both are wholly owned subsidiaries of the New York based American
Express Travel Related Services Company, Inc., the largest operating unit of
the American Express Company. Amex Bank of Canada is the issuer of American
Express Cards in Canada. Amex Canada Inc. operates the Corporate Travel,
Travel Services Network and Travellers Cheques divisions in Canada. American
Express opened its first offices in Toronto and Hamilton in 1853 and now
employs 3,700 Canadians coast-to-coast.





For further information:

For further information: or for a more fulsome report, please contact:
Jolene Price, American Express Canada, (905) 474-8746, jolene.price@aexp.com

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