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Domestic airfare, hidden fees proving problematic for business travelers

Thursday, November 29, 2012

Domestic airfare, hidden fees proving problematic for business travelers

Today's executives face many challenges. From securing suitable accommodations at a reasonable rate to negotiating deals on corporate airfare, there is much for travel management professionals to consider. Choosing serviced apartments and corporate housing is one way for budget-conscious executives to save money without compromising on quality, but other aspects of the business travel experience are becoming harder to manage. According to Business Travel News, domestic airfares remain stubbornly high in light of reduced service and prolonged economic uncertainty.

Industry pushing back
The news source reports that, according to data published by travel management company Travel Leaders Corporate (TLC), the average price of both domestic airfare and vehicle rental increased during the third quarter of the year. The approximate rate increase of a domestic flight in the U.S. rose by around 3 percent. Forecasts based on pricing information indicate that this trend could continue until at least six months into 2013.

For executives who choose hotel chains over corporate apartments, there was some slightly better news as prices held steady at an average of $140 per night. However, vehicle rental prices continue to increase domestically, rising from an average of $147 to $168.

While these figures may present business travelers with additional hurdles when it comes to securing a good deal, international travel trends do not mirror those observed in the U.S. David Holyoke, president of TLC, told the news source that lingering economic problems in Europe have contributed to a decline in demand for international flights, resulting in a significant decrease in average fares. The average international ticket price fell from $1,710 to $1,622, which suggests that fears of financial instability in Europe are having a substantial impact on the global business travel industry.

Stern warnings
In light of higher domestic travel costs, corporate travel managers must do everything they can to reduce the cost of business travel. Choosing serviced apartments and corporate housing could soon become a popular option for executives. In addition to the potential financial gains this type of accommodations offer, corporate apartments may also offer executives an opportunity to avoid hidden fees commonly associated with many hotels.

According to CNN, the Federal Trade Commission (FTC) recently issued warnings to 22 hotel chain operators over potential violations of FTC regulations pertaining to misrepresentation of online rates. Investigators at the FTC uncovered numerous examples of hotels providing misleading information concerning the inclusion of mandatory fees in booking quotes. Some hotels were warned for being intentionally vague about the specific taxes, fees and associated costs of their suites, which can prove misleading for both business travelers and recreational tourists. The FTC has not yet released the names of the hotel chains that were issued warnings.

"This is the first time the FTC has publicly stated its position that it is deceptive for the hotels not to include mandatory fees as part of the total price they quote," said Betsy Lordan, an FTC spokeswoman, as quoted by the news source. "We want to give the hotel operators an opportunity to come into compliance voluntarily before naming them publicly."

Some experts in the hospitality industry claim that such practices could negatively impact many hotels' brand. Executives who discover they have been charged hidden fees as part of their booking may choose to either stay at another chain, or take advantage of increasingly competitive services such as corporate apartments.

Howard Adler, a professor of hotel management at Purdue University, told the news source that guest satisfaction should be a priority for hotel chains, and that compliance with FTC regulations may prove worthwhile from a customer retention perspective.