The cost of business travel is set to rise in 2007 because of increased demand and higher operating costs, according to a new American Express forecast.
In response, corporates are likely to focus more on suppliers, tighten up compliance and increase adoption of self booking tools to contain costs.
The American Express Global Business Travel Forecast said that, globally, domestic air fares would rise by between 3%-5% while long haul business fares would go up by 3%-7%.
In Europe, fare increases would vary. "More passenger traffic and higher oil prices will be offset by continued low-cost carrier growth, increased capacity on high traffic routes and competitive fare structure changes," the Forecast said.
In countries like the UK, France and Sweden, there would be a "moderate" rise of 1%-3%.
But in Germany, "the impact of low-cost carriers may push air fares down and domestic fares may fall by 1% in 2007."
It said demand for hotels was "skyrocketing across all regions" and will give hoteliers more control over RFP negotiations.
Rising occupancy because of competition between leisure and corporate travellers would allow hotels to raise their rates.
In Europe, Amex predicted that hotel prices for mid-range properties would rise by 2%-5% and for upper range properties by 3%-6% in 2007 because of demand.
In the UK, where the hotel market is enjoying one of its best years, Amex said that prices would rise by 2%-6%, although in cities like Edinburgh, it could be by as much as 11%.
Occupancy levels in London could rise to 80%-90%
For France, the forecast said short haul air fares would go up by 1%-3%, long haul by 3%-4%, mid-range hotel rates by 1%-4% and upper range by 3%-6%.
In Germany, air fares for short haul would go up by -1%-2%, long haul by 2%-4%, mid range properties by 3%-5% and upper range by 4%-6%.
For Sweden, the predicted increases were, respectively, 1%-2%, 0%-2%, 2%-4% and 3%-5%.
Mike Streit, vp and global leader for American Express Business Travel Advisory Services, said the increases would force corporates to focus more on costs and compliance.
"We anticipate that more organisations will ramp up their procurement focus, implement new technology tools at the point of booking, update and strengthen their travel policies and focus on traveller behaviour to ensure that negotiated savings are fully realised.
"The migration to online booking, already well underway in North America, and the 'visual guilt' associated with fare transparency will gain even more momentum as a strategic imperative across other regions of the globe.
"We also expect to see a growing number of corporations zero in on corporate meetings spending as this area, until now, has been under-examined and is ripe for savings and control opportunities."
* see BTE's recruitment site www.businesstraveljobs.com