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As business travel increases, so do costs and headaches

  • Story Highlights
  • The average cost of a domestic business trip is up about $46 from 2006
  • Travelers also face fuller planes, more delays and more mishandled baggage
  • The rising price of fuel has increased the price of airline travel and rental cars
  • Next Article in Travel »
By Jonathan Mandell
CNN
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(CNN) -- Dave Malone is a traveling man. He makes at least 40 trips a year for business, and has done so for some 30 years.

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Dave Malone of The Radiators could sing the blues about his business travels.

As the lead singer and guitarist for The Radiators, a New Orleans, Louisiana-based band that is known for its live shows, Malone may not seem like the typical business traveler. But he has the typical business traveler's complaints.

"Flights are oversold and more expensive, hotels are more expensive, rental cars are more expensive; everything's more expensive," Malone says.

It is not just the costs that are increasing, but also the inconvenience: Just recently, yet another delayed flight forced him and his four band mates to cancel a concert in Connecticut. It is enough to make anybody sing the blues (or at least a mix of blues, rock, soul and funk), but Malone cannot recall any songs the band has composed specifically about business trips. "We've written songs having to do with other miseries," he says, "but not with traveling."

Mike Streit, who is also widely traveled ("I'm somewhere every week"), takes a more global view of business traveling, which makes sense, because his title is global leader of Advisory Services for American Express Business Travel.

Yes, business travel costs are on the rise, Streit says. A recent report by his department forecast the average domestic business trip as costing more than $1,054 this year, an increase of about $46 from 2006. (The average international business trip is almost four times as much, and is expected to increase by $180.)

But business travel itself is on the rise as well, Streit says. This, he says, reflects a new world of challenges ... and possibilities.

"One of the wonderful things happening in our globalized economy is that opportunities to connect with people are expanding," he says. "We're e-mailing more, we're videoconferencing more -- and we're traveling more.

"Travel can be viewed as an expense," Streit says, "but it also can be viewed as an investment."

The headaches of travel

More American-based companies are becoming multinational, many routinely dealing with dozens of countries around the world. The economies of the Pacific Rim and of Latin America are creating new business growth, which offers the potential of new competition and new clients.

That is why business travel is increasing. Business Travel News magazine estimates that some 300,000 companies in the United States have "significant business travel expenses."

Deloitte is a professional services firm that spends more than $200 million a year on plane tickets for its employees and is in the Top 10 in spending on travel. The number of trips those employees take annually has gone up about 20 percent over the last couple of years, according to Michele Bryant, who manages the corporation's employee travel.

At the same time, though, the travel industry has been struggling to keep up with the growing demand for its services.

The result?

"The business traveler is seeing fuller planes, more delays, more of their baggage being mishandled," says David Meyer, editor-in-chief of Business Travel News. "And they are having more trouble finding hotel rooms."

A survey of business travelers by Accenture, a management consulting firm, last summer found that more than half had experienced "maintenance-related travel delays or cancellations" within the previous six months.

Several recent epic delays provoked Kate Hanni to found an organization to push for an "Airline Passengers' Bill of Rights," which has been introduced as a bill in Congress. If passed into law, it would require, for example, that airlines be more forthcoming in information about delays and cancellations, and that, in the event of a long delay, passengers be provided with food and water and other essentials.

"The travel industry recognizes that there has been some hardship for individual business travelers, and is trying to figure out how to improve its services," says Paul Chiu, head of the division of Accenture that advises travel and hospitality-related companies.

Much of the activity seems to be focused on amenities. American Airlines, for example, is spending $1.3 million on each of 15 airplanes to replace the seats in first class and business class and provide on-demand video.

The expense of travel

The increased demand for travel, without a sufficient rise in supply, helps explain the boost in cost for all three major categories of business travel -- airline flights, hotel rooms and car rentals.

Other factors include the rising price of fuel, which has increased the price of airline travel and rental cars, as well as the cost of car services; the financial difficulties facing the automobile industry, which also have had an impact on car rental costs; and a lag in construction of new hotel rooms to meet the rising demand.

"Because hotels are overrun with people," Chiu says, "it's just inevitable that you're going to get increased levels of dissatisfaction."

Corporate travel managers, as well as individual business travelers, have been taking steps to keep down both costs and dissatisfaction.

Both try to make reservations as far in advance as possible, to assure the availability of a hotel room, and to bring down the cost of a flight.

More than three quarters of the corporate travel managers in several surveys are using online booking tools -- as are many individual business travelers.

A survey conducted by the National Business Travel Association, a trade group that represents about 1,700 of the travel managers in the biggest corporations, showed that many of its members are planning to negotiate longer and larger contracts with hotel chains and airlines; this would leverage their volume to bring down cost.

Travel managers expect to be using more midtier hotels, instead of luxury hotels. And they also are taking steps to make sure their employees actually stay in the hotels, and book the flights on the airlines, with which the companies have made their deals. Some companies are even asking their traveling employees to double up in hotel rooms.

"The allure of business travel, " Chiu sums up, "is not what it's cracked up to be." E-mail to a friend E-mail to a friend

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