Wednesday February 24 2010
International Business Travel News Report,
February 2010
The U.S. travel industry is facing the potential for increased fees that will impact every sector, including business travel. This, according to an article in Travel Agent Central.
The article quotes Paul Ruden, senior vice president for legal and industry affairs for the American Society of Travel Agents (ASTA), Alexandria, Virginia: “The industry faces a relentless tidal wave of tax and fee proposals from a multitude of sources – federal, state and local – including hotel occupancy tax proposals that will challenge the industry and our ability to respond.”
One piece of potential federal legislation includes a change in IRS tax rules that would reclassify independent contractors and employers that would add millions to federal treasury. At the state and city level, Ruden says that lawmakers and municipalities “see travel as a non-voting interest that can be tapped” for hotel and car rental fees and taxes.
The impact of travel fees isn’t limited to U.S. travelers. As explained in my commentary – Should U.S. Travel Promotion Act Impose New Fee on International Business Travelers and Tourists? – a US$10 fee is currently being proposed for visitors from 35 countries.
When taxes are increased related to travel, who do you think picks up the final bill?
Other business travel news
Business travel airline demand is recovering in the U.S., but that it will not return to pre-recession levels in 2010. According to the report, United Airlines has indicated that the effect of its cut in the number of flights is now poised to raise fares. Reuters also reports that other airlines are taking similar measures.
This also means that business travelers who have been forced into coach are likely to get used to it, according to a Business Week article. Business class passengers pay a premium fares that airlines count on for profitable revenue. While some capacity for business class is showing positive signs, the reality is that the changes that took place in 2009 may become permanent.
With this combination of factors, the unanswered question is what will happen to coach fares to offset the loss now that there’s a recognition that business must travel and meet?
At least it brings signs of hope for business travel hotels news. Both Marriott International and Starwood have announced this month that business travelers have started to return and cancellations are down.
