Canadian companies and their employees expect to both travel more and spend a greater amount on travel costs this year.

Organizations are expected to increase their level of business travel by a "solid" average of 4.2 per cent, according to the Ottawa-based Association of Corporate Travel Executives Canada (ACTE), which has 300 members. This in turn is expected to fuel an expansion in corporate travel spending, with Canadian companies enlarging their business travel budgets accordingly.

ACTE Canada's 2008 Business Travel Outlook notes the top three reasons for higher travel spending include a greater number of international trips to destinations other than the United States, rising travel prices and growth in domestic travel.

Both the ACTE Canada report and the National Business Travel Association Canada (NBTA) say Canadian travel costs are generally expected to remain flat or rise minimally, while attributing business travel growth to a strong economy.

ACTE Canada's report was done in conjunction with the Conference Board of Canada and surveyed 43 major Canadian companies.

It predicts corporate airfares for domestic or trans-border travel to the U.S. are expected to edge up by an average of 1.2 per cent over last year.

International airfares, it says, will climb slightly higher - by 1.6 per cent. Companies also said they expect higher hotel prices, with an increase of 2.5 per cent, and only a slight increase of 0.6 per cent in corporate rental car rates. Calgary-based NBTA Canada surveyed Canadian corporate travel buyers for 95 corporations from coast to coast.

Most said they expected airfares, hotel room and car rental rates to remain flat. "With increased travel as the primary driver of business travel growth, travel managers are looking to contain costs with effective travel policies," says NBTA Canada president Tanya Racz. "But it's an exciting time in Canada. We're starting to see a lot more companies involved - the mid-market is starting to recognize the importance of a travel program to help them manage costs."

But a third report, from Markham, Ont.-based American Express Business Travel, predicts that business travel in 2008 will make a much bigger dent in travel budgets, with higher costs for airfare, hotel rooms and rental cars.

The report says domestic or short-haul airfares will cost businesses two to five per cent more in 2008, while international or long-haul flight costs will rise by seven to 10 per cent. It also says mid-range hotel costs are projected to go up by five to seven per cent, upper-range hotel rates will jump by six to eight per cent, and that car rental rates will cost an additional two to four per cent this year.

"With high prices expected to continue well into 2008, companies need to start thinking and acting more like bargain-hunting consumers, so they can better manage their travel costs," says Lyell Farquharson, vice-president and general manager for American Express Business Travel. Canadian companies should use their corporate travel policies to negotiate lower rates and availability in order to maximize their benefits, he adds.

All three reports agree on one thing: Tougher travel negotiations lie ahead for travel buyers.

"As Canadians (businesspeople), we are travelling more - internationally, domestically and then trans-border," says Onita Dey-Frankian, the industry and association liaison for ACTE Canada. "Because of the economy ... business travel will be at an all-time high. Increasing demand sparks higher prices and travel managers will have to try to balance costs."

As more and more companies try to cut travel costs, airlines are offering more business-friendly options.

Calgary-based WestJet says that even though it doesn't offer a separate business-class option, its share of the domestic business travel market has been steadily increasing.

"Business travel is an important component of our service. Roughly 45 per cent of our seats are occupied by business travellers - the majority of that would be domestic," says Richard Bartrem, WestJet's vice-president of culture and communications.

"For an airline that started as a 'visiting-friends-and-relatives' airline, we've grown quickly to become a formidable choice for business travellers. We have a number of large corporations - including Wal-Mart - that have signed agreements with us."

Both WestJet and Air Canada have taken steps to woo business travellers.

WestJet cites its on-time performance as second only to Hawaiian Airlines. It was also the first airline in North America to introduce electronic boarding passes. It now has pay-per-use third-party lounges at Vancouver, Calgary, Winnipeg and Ottawa airport and it also boasts a liberal credit-transfer policy that allows travellers to transfer a purchased ticket to a co-worker or family member.

Air Canada, meanwhile, is continuing to upgrade its fleet, with deliveries of new state-of-the-art aircraft to continue throughout 2008.

All international Air Canada flights will feature lie-flat bed suites for its Executive First customers, while all North America flights will feature new seats for all customers in executive and economy class, says Air Canada spokeswoman Angela Mah.

Mah adds that Air Canada's flight passes - buying air travel on a subscription basis, similar to purchasing a cellphone plan or magazine subscription - are being well received.

(Laura Severs can be reached at laura@businessedge.ca)