Runzheimer predicts cutback in business travel spending

Overall business travel costs will decrease 7% during 2002, according to the travel experts at Runzheimer International, the management consulting firm based in the Racine County village of Rochester. This prediction, published in Runzheimer Reports on Travel Management, an industry newsletter, is based upon the weighted average of the four major business travel cost components: airfares, lodging, meals, and car rental.
“The main reason overall business travel costs will drop is that companies will operate with both fewer trips and lower-scale suppliers on the ground and in the air, as well as for sleeping accommodations,” according to Rolfe Shellenberger, senior travel consultant at Runzheimer and one of the main architects of the forecast.
Following is a breakdown of cost projections by category.
Airfares: +3%. Despite a flurry of experimental price deductions aimed mostly, at the leisure traveler, air travel pricing is up because of fuel cost spikes and a tendency for airlines to depend on in-elastic business travel demand. Airlines also will increase fare levels sufficiently to neutralize most discounts given to large volume corporations at the negotiating table.
Lodging: -10%. A history of excessive hotel rate increases will change lodging extravagance to lodging practicality on the part of business travelers who will use more modestly priced hotel/motels when it will not compromise trip missions.
Meals: -10%. Meal costs have been allowed to escalate in recent years even though competition for dining dollars has been keen. When travel budgets are under scrutiny, more attention is given to prices paid. Consequently, a big drop is expected and auditors who must review meal costs in isolation because of tax laws governing their deductibility, will be reminding supervisors when meal costs appear to be excessive.
Car Rental: +2. Do not expect to see any diminution of municipal appetites for exploiting car rental at airports. A combination of taxes and fees tacked onto published rates will continue to escalate.
Runzheimer (www.runzheimer.com) said its annual forecast of business travel costs is not a prediction of pricing levels, but instead of buying behavior in light of travel supplier pricing practices.
July 20, 2001 Small Business Times, Milwaukee