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Air fares and hotel rates on the rise

Air fares and hotel rates on the rise

The difference in price between business and economy airfares paid by UK business travellers widened in the second quarter of 2009, according to a report by American Express.

Top end business fares went up by 1.3% while low end business fares fell by 19.5%, according to the American Express Business Travel Monitor Europe.

Meanwhile economy class high fares fell by 11.7%, but the lower fares fell by almost 20%.

The news follows an OAG report which showed that airlines are finally increasing capacity after months of cuts.

The report also found that after several quarters of decreases hotel rates finally went up in almost half of European and Middle Eastern cities.


Joakim Johansson, vice president, Advisory Services for EMEA, American Express Business Travel, said:

“As business travellers scale back on the number of trips taken, coupled with tightened corporate travel policies, a downward pressure has been placed on both business and economy fares, but this is more pronounced in economy classes. 

“We continue to see business travellers changing their habits and choosing economy travel where possible rather than business class, enabling companies to retain travel vital to the success of their business while cutting costs.”

This widening trend was seen in business fares paid in other Europe and Middle Eastern countries where the highest business fare fell by 5% and the lowest business fares dropped by 12.7%.

In economy fares, the gap shrank with the most expensive economy fares falling by 16.6% and the lowest by 14.1%.

In hotels, 24 out of the 49 European cities saw average daily rates rise, in particular those cities with direct exposure to the oil industry including Moscow and Abu Dhabi.

In addition, both London City and Heathrow airports and Frankfurt have experienced some recovery following the decreases in the second quarter of last year, due to the downward spiral in the financial industry.

However, decreases in rates continued in parts of Germany with a strong manufacturing base.

In Spain the economic downturn is still heavily affecting business activity and travel in Madrid and Barcelona. 

However, most cities continuing to show a decrease showed a slower rate of reduction compared to the first three months of the year.

Karen Penney, vice president Business Solutions, American Express Global Commercial Card, said: “We believe the start of recovery in the hotel industry is a direct result of the industry’s proactive response to balancing supply and demand.

“For example many hotel chains have shut down floors, closed marginally profitable hotels, put a stop on new builds and postponed openings.

Penney continued: “Overall we expect the slowdown in hotel rate reductions to continue through the third quarter, with the first significant rises expected in the last three months.

“The hotel market is still a buyer’s market; however this window of opportunity may be closing. We urge travel buyers to take advantage of the current market conditions for 2010 rates while they can.”