American Express Study Shows Business Travelers Negotiating Lower Rates

NEW YORK— As business travel declines across the country, many corporations are negotiating lower rates with hotels, which has resulted in a decline in average booked rates at U.S. properties. According to the American Express Business Travel Monitor (BTM), during the second quarter 2001, business travel costs dipped or stabilized from the previous period. The change came as firms tightened control over travel budgets and suppliers fought softening business travel demand by offering bargains to corporate travelers. “Airlines and hotels are eager to get corporate travelers back on the road, and companies, for their part are willing to provide the business- if the price is right,” said Rusty Carpenter, vp/general manager of American Express Consulting. Carpenter added that many companies “are putting greater emphasis on using cheaper, leisure-type airfares and lower-cost hotel rooms.” The BTM provides the average room rate of all hotel reservations booked in the U.S. for domestic and international hotels by American Express Corporate Travel Clients. The study showed that the average booked hotel rate domestically in the second quarter of 2001 was $134, down 2% from the first quarter, as companies benefited from lower rates negotiated earlier in the year and as they directed travelers to use lower-cost rooms. (Nevertheless, rates were still nearly 4% higher than the second quarter 2000.) “This is a significant decline, as the second quarter is typically a high-demand period in key business destinations,” said Carpenter, who added that many companies “are negotiating rates with hotels that extend beyond the traditional one-year period, while others are going after value-added amenities like complimentary breakfast and last-room availability.” Even major business destinations experienced a decline in the average booked rate. From the first to second quarters of this year, rates booked at hotels dropped about 9% in Houston and Washington, D.C., and about 2% in New York. Meanwhile in corporate America’s warm-weather meeting destinations, second quarter average booked rates in Phoenix and Miami plunged over 30% from the first quarter of 2001, with rates in Orlando down by more than 15%. In the second quarter of this year, international booked rates fell to $188, nearly 14% lower than the previous period and 2% below second quarter 2000.