AMEX Q1 Data Reveals Air/Hotel/Car Trends

Domestic and International Airfare Increased in 2008 as Hotel Rates Decreased, Sliding Economic Conditions Definitively Shift Business Travel to a Buyers' Market in 2009

American Express Purchase of Economy Class Air Seats Surged in First Quarter 2009 as 
,,Companies Implement Tighter Travel Policies and Cost Savings Strategies

2010 Hotel Negotiation Promises New Opportunities for Buyers as Rates Drop 12 percent in Q1 2009

American Express Business Travel today released data and analysis of its North American-based domestic and international air, hotel, and car rental prices paid for the full 2008 year and first quarter of 2009, as economic conditions heavily impacted a change in average prices paid for business travel.

Data from the company's Business Travel Monitor (BTM), the industry's pricing benchmark, revealed that international and domestic airfare prices ended 2008 up year-over-year and hotel rates down slightly. Looking at Q1 2009 data, signs point to the effect of a weakening economy, belt tightening by corporations, and falling consumer demand noticeably impacting travel rates across the board.

- Average domestic and international airfares paid increased 7 percent and 6 percent respectively in 2008 as a whole, but began to slide in Q4 2008,continuing into Q1 2009.

- Q1 2009 domestic average airfares paid are down 9 percent compared to the first quarter last year.

- Q1 2009 international average airfares paid are down 12 percent versus Q1 2008.

- Average international and domestic booked hotel rates both showed year-over-year decreases of 12 percent in the first quarter 2009.

- International business class air travel fell from an average of 50 percent of all bookings in 2008 to 39 percent in Q1 2009.

- Economy class international air travel surged 13 percentage points to 56 percent of all travel in Q1 09 versus a steady 43 percent throughout 2008.

'While upward pricing pressures challenged companies to control travel and related costs throughout 2008, a buyers' market emerged at the end of the year, and is in full force today,' said Frank Schnur, vice president, Global Advisory Services, American Express Business Travel. 'Close tracking of travel prices is paramount as companies focus on optimizing their travel activities and savings as they navigate this unprecedented time of price cutting and corporate contract renegotiations.'


Average International Airfares Paid Increased Six Percent Year-Over-Year in 2008:
2003 - $1,469
2004 - $1,514
2005 - $1,614
2006 - $1,707
2007 - $1,836
2008 - $1,955

Quarterly 2008 and Q1 2009 International Average Airfares Paid:
Q1 2008 - $1911
Q2 2008 - $1980
Q3 2008 - $2010
Q4 2008 - $1918
Q1 2009 - $1680

Average Domestic Airfares Paid Surged in 2008 but Recession Took Hold Late in the Year
In line with international trends, domestic airfares also surged in 2008 as a result of fuel volatility. Base fares began to level off as airlines chose to charge separately for in-flight meals, choice seating, and other services to off set intolerance to base fare increases. Airfares then fell victim to a drop off in demand as economic conditions further deteriorated toward the end of the year. Similar to international fares, a fall in price was seen in Q4, but the most dramatic drops were in the first months of this year.

Annual Average Domestic Airfares Paid Increased 7 Percent Year-Over-Year in 2008:
2003 - $243
2004 - $225
2005 - $216
2006 - $231
2007 - $230
2008 - $246

Domestic Average Airfares Paid:
Q1 2008 - $233
Q2 2008 - $260
Q3 2008 - $253
Q4 2008 - $237
Q1 2009 - $213

Average International and Domestic Booked Hotel Rates Decreased Year-Over-Year
New hotels expanding globally increased supply and drove international average booked rates in 2008 down by five percent. Slowing demand for domestic hotel bookings and increased availability pushed prices down nearly three percent in North America last year. So far this year, average room rates are down 12 percent for both categories from the first quarter of 2008. Of note, the highest price decreases in North American hotels fell within the budget and deluxe categories as both tiers reduced prices to attract travelers looking for cost-conscious alternatives.

International Average Booked Rates Paid Decreased Five Percent Year-Over-Year:
2003 - $195
2004 - $197
2005 - $212
2006 - $230
2007 - $266
2008 - $252
Q1 '09 - $228

Average Domestic Booked Rates Paid Decreased Three Percent Year-Over-Year:
2003 - $127
2004 - $132
2005 - $137
2006 - $141
2007 - $157
2008 - $153

'The economic environment is fueling proactive off-season communication between travel buyers and suppliers as they work together to secure the best rates and ensure credit for volume. Those willing to be pragmatic and proactive on both sides of the table can reap the rewards. For the first time, we are seeing buyers renegotiate greater reduced rates for a longer period of time, in some cases two years. Hoteliers are taking advantage of these rates by reaching out to potential new clients to compete for business,' said Mr. Schnur.

Looking Ahead to 2010 Negotiating Season:
On April 30th at 2:00 pm EDT, American Express Business Travel is hosting and moderating a live online event with industry leaders representing Hilton Hotels, InterContinental Hotels Group, Omni Hotels and WORLDHOTELS to discuss the impact of the current economic environment on the hotel industry, mid-year renegotiations, as well as provide insight on the best methods to support both travel buyers and sellers through the upcoming summer travel season. The event will take place on, an online community that brings together the collective intelligence of business travel industry players in a collaborative environment.

Car Rental Rates Post Modest Increase in 2008 but Ease in Early 2009
In 2008, the overall cost of car rental increased slightly as demand increased and buyers saw the impact of fuel costs over the course of the year. Taxes and local fees on car rental transactions also continued their steady increase. However, slightly weaker demand in the first quarter of the year has stabilized costs so far this year. There was also increased interest in intermediate and hybrid cars versus larger cars for overall cost control and fuel savings. This reflects adherence to new policies surrounding ground transportation and eco policies. Advisory Services is predicting the overall daily cost of car rental will remain flat for 2009.

Average daily cost of car rental:
2003 - $65
2004 - $65
2005 - $66
2006 - $69
2007 - $72
2008 - $74
Q1 '09 - $73

About the American Express Business Travel Monitor, North America
The American Express Business Travel Monitor is a key deliverable of American Express Business Travel Global Advisory Services' Research practice. It benchmarks the average prices for air, hotel, and car rental service by major cities and classes of service through aggregate analysis of American Express' extensive global database of purchase information.
The BTM includes both average published and purchased air fares captured across hundreds of domestic and international routes, including unrestricted first class, business, economy, and discounted, restricted economy air fares. The methodology for the average air fare paid is the one-way price paid by all travelers booked through American Express Business Travel, including taxes and fees, for all routes.
Average booked hotel rates, both international and domestic, represent the total spending of all American Express Business Travel clients, excluding taxes, divided by the total number of room nights confirmed. The full BTM includes hotel averages by major city neighborhoods and category of hotel by price range. The average daily cost for car rentals is drawn from American Express(R) Corporate Card data and includes all charges incurred, including mileage, gas, tax and insurance, divided by the average length of rental. Data for the distribution of rental class categories is drawn from all rentals booked by the entire American Express Business Travel customer base.

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