US pricier for MICE

THE COST of business travel from Asia to the US has surged, making it harder for corporate travel managers to secure good deals from airlines and hotels.

  10/10/2011 09:00

Airfares from China to the US have risen substantially in the last two years, noted
Jackie Teo, corporate travel manager of management consulting firm McKinsey & Company Shanghai.

A business class ticket on United Airlines or Continental Airlines, which cost RMB30,000 (US$4,706) in the past, is now RMB40,000, she said.
Dean Fowles, principal, travel & expense management, global sourcing-services, Rio Tinto, explained that volatile fuel prices and multiple global financial crises forced airlines to take a harder look at the way they run their businesses.
“Earnings have become more important and there is added emphasis on revenue,” he said. “Compared to before, airlines aren’t slashing prices to fill seats. Leisure travellers may still get great deals from airlines, but corporate travellers aren’t getting anything like they used to.”
Fowles added that contraction of air capacity in and out of the US with the two recent major American carrier mergers (United Airlines and Continental Airlines; Delta Air Lines and Northwest Airlines) had also affected the competitive rates of the past.
Margaret Li, director, procurement-Asia for American leather goods company Coach, agreed, pointing out that airfare discounts have fallen from 40-50 per cent to 10-15 per cent.
As a result, the burgeoning airfares have forced at least one company – McKinsey & Company Shanghai – to pressure hotels in the US for better rates in order to keep costs down.
The problem is, room rates in the US are also rising, with rates for a standard room leaping from US$100 several years ago to US$250 today, said Catty Yun, senior manager, global procurement, finance department of National Basketball Association (NBA) China.
Pricier multiple-entry business travel visas into the US are also to blame, said corporates.
Niranjan Phatak, manager-travel & immigration services, HSBC India, said the cost of these visas had risen from US$600-700 to about US$2,000 over the last two years.
As corporates cannot avoid travelling to the US for business meetings, the incentive market is the one bearing the brunt.
McKinsey’s Teo said incentives to the US have been shifted to Hong Kong and Singapore.

(TTG Asia)


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