The American Express annual Global Business Travel Forecast, released recently predicts that car rental rates will increase at a slower rate in 2008 than in 2007–an increase estimated at two to four percent.
David Balfour, American Express senior practice leader for car rental said during the company’s travel forecast tele-conference that the car rental industry’s new competitive landscape and ownership changes across major U.S. car rental companies has created a spirited competition for corporate business.
“The headline for car rental in 2008 is that due to this new competitive market, companies who aggressively manage their car rental spending can expect to see savings of 10 percent or more,” Balfour said.
The report suggested in 2008, a domestic trip inclusive of airfare, car rental and hotel stay will increase six percent, or $63, bringing the average trip cost to a total of approximately $1,110. For an international trip, the increase is expected to be nearly seven percent, or approximately $205, bringing the cost of an average trip to $3,171.
Other issues that Balfour says are contributing to the increased car rental rates include fleet costs – 2007 saw about a 15 percent increase which is expected to decline in 2008. Also, interest rates are rising across the board which boosts the holding costs for suppliers.
Too, taxes are driving the increase with more than 100 excise taxes and local taxes on the car rental transactions in the U.S., according to Balfour.
Contract terms are also changing in favor of the supplier; they have become an increasingly important part of the car rental transaction.
Projections for the business travel industry was based on a combination of statistical forecasting, in-depth research of supplier markets, regional economic trends, interviews with American Express industry analysts and analyses of reports generated within and outside American Express.
