Cost of Business Travel Likely to Rise in 2000
Business travelers will face slightly higher prices on nearly every front in the new year, and in some cases the added costs will outstrip inflation. Here’s a look:
* On the road: By far the most business travel in North America is by car, and there is not much relief in sight for drivers. Gasoline prices at year’s end averaged 32 cents a gallon higher than a year ago, according to the American Automobile Assn.
Jeff Sundstrom of AAA says that while forecasting prices in the volatile energy market is hazardous, “we can say at this point that the increases seen throughout 1999 have about reached a peak based on where the price of crude oil is right now. OPEC nations have agreed to restrict production and said they will not make any adjustments until March of next year. We would not look for prices to come down at all at least until some time after March, and they may not come down at all.”
* In the air: Prices will rise about 3%, according to estimates from American Express and Runzheimer International, a Wisconsin-based consulting company. American Express says the increase is less than what travelers have put up with in the past few years, and in part reflects resistance from corporations, which are increasingly cutting deals and resorting to online bookings to keep costs down.
Another factor dampening the rate of increase, according to Runzheimer, is that many airlines have ordered new equipment, which will be delivered in the coming months, increasing capacity and perhaps competition.
* At the table: The restaurant industry has been struggling with a tight labor supply, which has caused it to pay more for help--when it can be found. That will continue into 2000, according to the National Restaurant Assn., which foresees menu prices going up 2.8% as a result. That is slightly higher than the projected inflation rate for the new year.
The industry expects the amount of money spent by consumers on food prepared away from home to pass the $1 billion mark for the first time in 2000. Runzheimer expects a higher jump in menu prices--about 5%--while American Express agrees with the restaurant association’s lower forecast.
* In the room: More and more hotels and inns are being built and older properties remodeled, but demand for rooms is also likely to expand in the coming year, according to PricewaterhouseCoopers. The consulting firm foresees the average daily room rate increasing by 3.8% in the new year, slightly higher than in 1999.
American Express thinks average corporate room rates will be up 5% to 7%, while Runzheimer predicts a 5% rise.
* Rental cars: American Express sees increases of 2% to 3%, with the average daily rental at nearly $59. Runzheimer pegs the increase at 5%.
