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On the Agenda: Higher Air Fares and Fewer Hotel Rooms

September 25, 1996|From Reuters

Air fares and hotel prices, the two biggest cost components of most business travel, are causing sticker shock in corporate circles.

A recent report compiled by American Express shows that business air fares rose for the sixth month in a row--with the typical cost of a business traveler's ticket at the highest level since January 1992.

At the same time, a report from Horwath Hospitality Consulting and Smith Travel Research projects that hotel rooms will be hard to get and expensive in almost every major market through the end of the year.

Los Angeles, New York, Boston, San Francisco and Orlando, Fla., are among the cities seeing significant jumps in hotel room prices and occupancy rates this year, according to Jeff Marvel, Horwath's director.

The hotel situation is a result of demand finally catching up with what has been an oversupply of rooms. Marvel said in an interview that the latest findings show some occupancy rates dropping for the first time in 54 months.

"So the industry is maybe peaking in terms of occupancy growth," he said.

The industry is adding rooms, Marvel said, but the trend has been toward limited-service, extended-stay properties not typically located in city centers. Such hotels tend to be suburban or airport-oriented because they often cater to people who are being relocated by their employer, he said.

Meanwhile, the Travel Industry Assn. of America said in its annual autumn travel forecast, based on a survey of 1,500 adults, that business travel appears to be leveling off.

The number of people surveyed who thought they'd be traveling on business during the rest of 1996 dropped to its lowest level since the group began tracking such trends five years ago.

The group said the situation comes from a "cautious corporate climate" in which executives have an eye on holding down expenses. Another factor is that in companies that have downsized, the remaining executives have taken on more travel and have full schedules.

Figures for the last few years indicate that the amount of business travel is about the same but that fewer people are making trips. Travel has probably reached a plateau, an association spokeswoman said, because those who are doing the traveling are becoming burned out and don't want to take on more.

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