The cost of doing business could rise just a bit in the coming year for firms that include travel in their budgets. Many companies plan on keeping their travel spending rather flat.
Those projections come from the American Express Global Business Travel Forecast 2015 study, which projects trends related to corporate travel. The recently released study points to slight increases in pricing for travel and lodging in many regions of the world.
Corporations, however, have indicated a desire to maintain overall travel budgets at last year’s level. While companies don’t intend to increase their budgeted allotments for travel, they also have no intention of cutting them since they are seeing a correlation between travel and revenue increases, the study points out.
American Express predicts a number of travel-related price increases in the coming year that could impact corporate bottom lines. Those increases, however, are modest.
For example, the cost of short-distance, business class airline tickets is projected to rise by about 6% while car rental base rates are anticipated to climb by only 0.5%. Some prices could even drop in 2015, especially in relation to travel in Latin America, Europe and Asia-Pacific, Amex predicts.
Domestic Asia-Pacific airfares, for example, are anticipated to remain flat with only modest increases likely while international fares are expected to drop somewhat.
North American travelers might encounter higher fares and lower availability as the dynamics of travel in the region changes. In regard to airlines, North American domestic air travel rates could be impacted by consolidation in the market and inventory controls that will lead to fewer seats in lower-priced classes on desired, busier routes.
Hotels in the busy regions are likely to see an increase in demand that could boost rates while car rental companies raise rates to enhance profitability.
Business travelers in Europe are likely to see fares that remain mostly neutral, American Express predicts. Added capacity on some transatlantic routes, however, could even result in lower fares.
While 2015 is anticipated to bring a mixed bag in regard to travel cost increases, American Express indicates companies hoping to hold the bottom line might be able to help themselves by enforcing stricter travel polices.
American Express found that many larger companies have already strengthened their travel policies to keep spending in check. For example, many have lengthened the flight time required before a higher-priced business class ticket can be purchased.
Mid-sized companies are not all taking the lead from their larger counterparts, American Express found. Many still allow employees to book their own travel arrangements online.
That practice, David Reimer, American Express Global Business Travel Asia general manager, says is likely a mistake since corporate deals are not accessible. Those companies, he suggests, could help themselves and their employees by taking on the duty of booking.
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