AmEx's Petruccelli: No Business Travel Recovery Until End 2010

Business travel isn't likely to recover significantly before the end of 2010, a top American Express Co. (AXP) executive said Wednesday, despite recent trends indicating deterioration in the key travel market has stabilized.

Charles Petruccelli, president of American Express Global Travel Services, also warned that the "new normal" in business travel is shaping up to be a cost-conscious customer keenly aware of how their travel dollars are spent.

"We should not kid ourselves" as an industry, Petruccelli said, speaking here at the Beat Live, a business-travel conference. "It will take a long time for customers to flock again to the front of the plane" for high-priced seats or to shell out for other premium services without good reasons.

Still, he said there are plenty of opportunities for the travel industry amid the evolving business-travel market.

Among them, he said more corporate customers are likely to be open to outsourcing internal travel-management functions if a case can be made for efficiency and cost savings. He also said investments in technology, such as broadband access and travel-specific mobile applications, can help the travel sector make the case that business travel is a highly effective use of corporate resources.

"Discounting will erode value," he said of the inclination simply to cut prices to try to lure dwindling numbers of travelers.

The travel sector should be open to "cost flexibility," he said, but it also should make the investments that will enable it to thrive once a recovery takes hold.

Recent trends, such as airline passenger counts, are indicating that the steep slump in business travel is easing.

Petruccelli concurred Wednesday that figures from his company "suggest that demand is bottoming out." But he tempered the view by noting that he expects "a prolonged period" of weak demand before a significant uptick.

"The reality is that travel, and especially business travel, continues to be severely depressed," he said.

Sam Gilliland, chief executive of privately held Sabre Holdings Corp., offered much the same view.

"It does feel like we are at a bottom," said Gilliland, who also spoke at the conference here. But, "I'm not willing at this point to call this over and say we're on the mend."

-By Bob Sechler; Dow Jones Newswires; 512-394-0285; [e-mail]