Average domestic flight cost $1 less last year

Domestic air fare and hotel costs were mostly flat in 2007, while the price of international air fare leaped for business travelers.

The average price of domestic air fare in 2007 was $230, down from $231 in 2006, but still higher than the average of $216 paid in 2005, according to the American Express Business Travel Monitor. U.S. travelers managed to pay less last year by booking way in advance and taking advantage of more cheap seats offered by legacy carriers as well as low-fare airlines.

But the average international fare has surged to $1,836 from $1,707 in 2006, and companies are increasingly booking international business travel one grade lower, such as moving from business class to premium economy, said Mitch Cwanger, who leads air travel advisory services for American Express Business Travel.

Mid-price and budget hotels, meanwhile, saw rates flatten while deluxe hotels enjoyed double-digit rate increases. In order to compete, non-luxury hotels beefed up amenities such as free Internet and improved room comforts while keeping room rates low.

"In the past a lower tier wouldn't even be considered in a corporate travel program," said Cwanger. "Now they have upgraded their properties and can compete better."