COMMENT: Reasons to be cheerful?

PwC's Stephen Broome examines the sector's cautious optimism, green travel and the forthcoming election

More delays for the business traveller

Following a sustained period of turbulence for business travel, and at first glance, the executive tourist is cautiously returning, taking to the air and sleeping in hotel beds once again.

This is good news for UK hotels and business focused travel companies. For the first time in two years the industry is excitedly anticipating group and transient business picking up and there is hope of pent up demand for face to face meetings in the air.

Despite a UK wide RevPAR decline of almost 10% in 2009, over 3% of growth is forecast for the coming year, and nearly 5% in 2011. London hotel trade has been driven by the leisure tourist taking advantage of the exchange rate, cheap room rates and domestic holidaymakers opting not to holiday abroad, but the Capital will also be first to see the return of the executive traveller as the financial services industry becomes more active.

Flight to green

However, the onslaught of the global economic downturn has not been the only factor impacting the movement of the business traveller. As the hospitality & leisure (H&L) industry looks set to experience some recovery in 2010, the flight to green travel has become more important than ever.

Our (PwC) air travel CO2 emissions are down 20% on last year partly through better information being available to our frequent travelers on their sustainable travel choices and personal CO2 footprint. Usage of video conferencing facilities has increased 44% since the beginning of 2009, and the average C02 output of new vehicles coming into our car scheme is 140g/km, which compares to a UK average for new cars in 2008 of 158g/km.

While the recession temporarily wiped out business travel, the environmental agenda is certainly changing decision making around travel. This also adds to the now cautious nature of the executive pilgrim.

Election fever

Although corporate demand is returning, and aside from the green evolution of the industry, departmental public sector cut backs are imminent following the election - and travel and hotels will be an easy target.

Assuming a dependency of 30% of hotel business on public sector supply, cuts could shave almost 1% off the latest UK RevPAR growth projections in both 2010 and again in 2011.

Occupancy is likely to be the first casualty of any post-election cuts as travel budgets are slashed and private sector business is also dependent on public sector contracts which could reduce the number of corporates travelling as well.

In short, the recession may have a lingering effect. In a move to cut public sector spending, in the face of and aftermath of an election, the business traveller may encounter long delays on the return journey.