Businesses Cut Back on Travel
As the global economy slows and fewer travelers take to the skies, business travel costs are expected to continue rising this year, Global Insight reported this week.
The volume of domestic travel is set to reach only 1.987 billion trips this year, down 0.6 percent from 2007, according to the Massachusetts-based financial analysis firm.
While leisure travel, which accounts for about 76 percent of the total, is up by 0.5 percent over last year, business travel is expected to drop off by 3.8 percent, the report said.
The decline will "negate leisure's rather anemic gain," Kenneth McGill, the firm's managing director of travel and tourism services, said in a statement. McGill said leisure travel rates will likely succumb to souring economic conditions in 2009.
"Although the travel slowdown will vary by traveler type and purpose, we can expect businesses to further reduce travel budgets," Doug Shifflet, CEO of travel research firm D.K. Shifflet & Associates, said in a statement. "In the leisure market, international remains an opportunity for the U.S.A, but domestic leisure is under increasing duress," he said.
At the same time, the average travel prices are expected to rise by 8.2 percent this year, driven by increases in transportation and accommodation costs, the report said. Higher prices will boost overall travel spending to a cyclical high this year, advancing by 6.4 percent over 2007. Still, slowing demand should ease some of the pressure on hotel rates, gasoline prices, and food and beverage costs in 2009, the report said.