BUSINESS travel from the UK has been dramatically hit by growing economic uncertainty, according to the latest investigations into airline fares and hotel rates.
The American Express European Corporate Travel Index for the last quarter of 1998 showed the cost of business-class air travel has stayed static for the first time in two years.
Matthew Davis, manager purchasing management group, said:”The bubble has burst. I don’t think we’ll see fares going down but I don’t think there will be any increase.
“Over the last few years, the gap has been widening between the cost of business and economy class, and sooner or later companies are going to realise they can save 60% by downgrading – which means two people can travel instead of one.”
This trend was backed up by a study by Company Barclaycard, which found 33% of the 2,000 business travellers polled travel business class, compared to 36% in the 1997/98 study.
According to this survey, companies in all turnover bands have cut their use of business travel, but particularly those with a turnover of between ú5m and ú10m. In this bracket there has been an 11.5% drop.
Simon Chick, Company Barclaycard’s marketing manager, said: “There is no reason why this should slow down or stop.”
The survey found that cost cutting by companies has boosted business traffic on low-cost airlines (see page 18). In the hotel sector, average room rates worldwide were also static for the latter part of 1998.
A BTIUK Hogg Robinson survey found the average hotel rate rose 0.2% during the July to December period, although there was a 6% rise for the year.
Amex’s survey of the last quarter of 1998 found rates had actually started to decrease in almost all regions. Borge Ellgaard, vice-president hotel relations group Europe, said it was hard to predict the future: “It depends which way the economy is going and there isn’t any consensus.”