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Going The Distance

Travel costs are expected to soar this year.

There's good news and bad news for business travelers this year, according to researchers at Runzheimer International. Car rental, hotel and meal prices should rise at reasonable rates. But air travel rates will climb considerably faster, rising 10 percent higher in some segments.

The reasons for the increases vary by industry segment. Lack of competition on many air travel routes will lift average full-fare economy ticket prices by more than 5 percent, while high occupancy rates will lead to average lodging cost increases of 4.9 percent.

Smaller fleet sizes and higher costs are exerting similar pressure on car rental rates, which will lurch forward by 4.8 percent, while a trend toward less restaurant dining is keeping restaurant prices at a modest 3.5 percent increase.

As Roanoke, Texas, airline consultant Barry Clark sees it, the markups will especially impact airline travel. "As airlines push their rates higher, [business owners] are going to look for other ways to buy tickets," he predicts. That means you may soon find yourself eliminating some of your travel agent's services in favor of a direct-purchasing agreement.

Car rental rates may outpace air fare increases in some parts of the country, according to Steve Swope. "The cost of supply in the car [rental] industry has gone up, but prices haven't gone up as dramatically as they should have," notes the senior vice president of Talus Solutions Inc., a revenue management solutions provider in Atlanta. "That's going to change this year."

Bruce Tepper, a travel and tourism consultant with Joselyn Tepper & Associates' San Francisco branch, sees another side effect of the rising travel expenses when it comes to hotels. "Demand is catching up with supply in the lodging industry. In many cases, the house is full and there's less willingness for the property to negotiate [prices]," he says. "So travelers [may have to] trade down to a cheaper brand."

One thing is certain: You'll be paying more--perhaps a lot more--for travel in the months to come.


Christopher Elliott is a writer in Los Angeles and a columnist for "ABC News Online."

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Christopher Elliott is an Orlando, Fla., writer and independent producer who specializes in technology, travel and mobile computing. His work has appeared in numerous newspapers, magazines and online. You can find out more about him on his website or sign up for his free weekly newsletter.

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This article was originally published in the January 1999 print edition of Entrepreneur with the headline: Going The Distance.

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