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The Global Recession Could Have a Lasting Effect on Business Travel;
Companies Finding New Appreciation for Video Conferencing

By Sara K. Clarke, The Orlando Sentinel, Fla.McClatchy-Tribune Regional News

October 1, 2009 - A forecast released Wednesday confirmed what many in the tourism industry have feared: The global recession could have a lasting effect on business travel.

Despite pent-up demand for face-to-face meetings, any improvement in the amount of business travel next year will be small, according to the Global Business Travel Forecast released by American Express Co. That's because businesses have begun investing in alternatives to travel during the record-long recession and will continue to be more discerning when it comes to how and when to take trips.

"There is absolutely no question that there is a lasting effect of the recession moving forward," said Herve Sedky, vice president and general manager of American Express Business Travel. "Companies will actually remain smarter buyers when it comes to travel."

Companies are expected to loosen the purse strings for events and conferences; that's good news for Orlando's convention businesses, which have been fighting to regain lost business travelers. But corporations are now armed with a "new appreciation for return on investment," so proving the value of specific types of travel will be a priority, according to the forecast.

"People are looking at video conferencing, they're looking at social media -- different ways for people to connect with each other and be productive," said Frank Schnur, vice president for American Express Global Advisory Services. Still, he said, "It's critical for people to get back on the road, and we see that pent-up demand with our clients."

The company, known for its credit cards but also one of the world's largest travel agencies, predicted that the cost of the average domestic business trip will increase 1.2 percent next year to $1,080. It said U.S. airlines will be able to raise fares from about 2 percent to 8 percent, as they continue reducing capacity to match demand. But it also said hotels will continue to endure lower room rates, with declines nationwide of 1 percent to 6 percent, because of their fixed supply.

In Orlando, the American Express survey projects that hotel prices will decline as much as 2 percent at mid-range hotels in 2010 and as much as 3 percent at upper-range hotels.

The forecast mirrors predictions by Smith Travel Research, which projects a 3.4 percent decline next year in the average daily room rate at U.S. hotels.

Orlando tourism executives have been preaching the value of business travel to corporations and meeting planners this year. The Orlando/Orange County Convention & Visitors Bureau said recently it has developed a new meetings-and-convention Web site, placed calls to Fortune 500 companies, and mailed letters to government officials and Fortune 1000 companies.

In a presentation before the Orange County Tourism Development Council, the visitors bureau said that, despite budget restrictions, the agency hasn't reduced its travel spending.

"It's very important that we as a CVB meet fact-to-face with our meeting planners," said Gary Sain, the bureau's president and chief executive officer.

Sara K. Clarke can be reached at skclarke@orlandosentinel.com or 407-420-5664.

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Copyright (c) 2009, The Orlando Sentinel, Fla.

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