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Per diems slip as car cos. slash rental prices. (2003 Corporate Travel Index).

Article Excerpt
The average costs of doing business in the United States dropped 4 percent in 2003 from last year, as suppliers--notably car rental companies and hoteliers--hunkered down to compete for their share of revenue in a lagging travel market. As a result this year's domestic average per diem of $222.01 is a decrease of nearly $10 compared with 2002.

In previous years, the main goal of suppliers was to gain corporate clients and marketshare and obviously add revenue to their bottom lines. This past year, however, a tenaciously faltering economy caused suppliers to reduce prices, and sometimes services, in order to merely retain their share of the corporate pie. Due to the economy and corporations' keen eyes on their own bottom lines, fewer travelers and fewer trips had suppliers nearly begging for business, reflected in this year's average hotel rate, which rose less than 25 cents from 2002. Still, competition among the car rental suppliers formed the foundation for the biggest drop in the per diem this year, with an average decrease of more than $19. In fact, a full-size car this year averages $20 cheaper than 2002.

Further indicative of the obstinate economic environment, only five of the top 100 U.S. business cities in 2003 have an average per diem of more than $300, 50 percent fewer than last year.

Business Travel News' 18th annual Corporate Travel Index continues to reflect the average per diem rate business travelers would pay if corporate travel buyers did not negotiate on their behalf. In undertaking this year's index, BTN built upon the baseline we established last year with which to measure the costs of doing business in the top 100 U.S. cities.

BTN editors updated our database of more than 700 hotels in the upper upscale, upscale and midprice--with and without food--categories, we asked Dubuque, Iowa-based Advanced Data-Comm to telephone those properties to obtain corporate room rates, as well as food costs from those hotels with onsite restaurants. The properties surveyed were located in 100 of the largest U.S. business destinations, within a seven-mile radius of each city's downtown area and served a primarily business clientele. The cities were chosen based on the 100 largest metropolitan statistical areas as defined by the U.S. Census Bureau. This year, white Plains, N.Y., replaced Stamford, Conn.

Advanced Data-Comm researchers asked property managers for their corporate rates as of the first week in December 2002. Corporate rates for the two types of midprice properties were combined to produce the median midprice average for each city; likewise for the upper upscale and upscale corporate rates. The overall corporate rate average for each city represents the median average of the midprice and upscale figures.

Advanced Data-Comm asked food and beverage directors at properties with onsite restaurants to quote menu prices for specific sample meals described as follows: breakfast--two eggs with breakfast meat toast orange juice and coffee; lunch--soup, hamburger, pie and soft drink; and dinner--soup, strip steak, ice cream, coffee and cocktail.

Meanwhile, Eclipse Advisors, the Philadelphia-based technology arm of Rosenbluth International, provided domestic car rental data it pulled from the Apollo global distribution system.

Eclipse obtained the average daily rate in each city from Avis, Budget, Hertz and National for midsize and full-size cars rented midweek in mid-January and returned to the same location midweek in February, which then was averaged to determine an average daily "corporate rate."

Total average car rental costs for each city were determined by averaging midsize and full-size rates. To verify the accuracy of the data, BTN editors called car rental suppliers and spoke with industry experts, including corporate travel buyers. Car rental figures do not include taxes or surcharges.

NEW YORK REMAINS PRICIEST IN U.S.

Although its average per diem rates dropped by a whopping $63, New York again this year was crowned as the most expensive U.S. city in which to do business, with a per diem of $334.59, compared with $397.46 in 2002. Honolulu shot up from number 10 in 2002 to number two this year at $319.18, a difference of more than $19 from last year. The Hawaiian city this year knocked Chicago and San Francisco down to third and fourth place, respectively, with the Windy City's per diem dropping more than $25 from 2002. White Plains, N.Y. weighed in at fifth place, with a $307.36 per diem rate.

Ninth-ranked Philadelphia this year rose six places from 2002, with a daily cost of $280.22, a small increase of around $4 from last year. Austin, which lingered at number 29 last year, shot up to 10th place in 2003, with an increase of more than $25.

Region by region, the Northeast for the second consecutive year surpassed the West as the priciest region, with an average rate of $249.09 as opposed to the West's $239.27. The South, at $209.32, had a slight edge over the Midwest's $207.68. Of the top 10, four cities were located in the Northeast, three in the West, two in the South and only Chicago represented the Midwest. That breakdown is fairly similar to last year's top 10 regional breakdown, in which there was one more...

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