The corporate travel industry has been urged not to fear a double-dip recession, by a leading industry accountant.
Andrew Burnham, head of travel at accountancy firm Macintyre Hudson, said public sector cuts will not affect the recent green shoots seen in business travel.
ABTN was speaking to Burnham after the GTMC quarterly transaction survey showed a significant rise in all sectors.
According to the industry poll, revealed exclusively to ABTN this week, the number of transactions in April, May and June rose by 12% on last year.
Air travel was up 15% in Q2 2010, compared to the same quarter in 2009, with rail travel up 6%, car hire up 11% and hotels up 7%.
Some fear this increase in demand for business travel is only temporary, with government cuts in public spending likely to drive the fragile economy into a nosedive.
Jérôme Moisan, Travelport's manager for the UK and Ireland, said: "When I've spoken with some of our larger customers, they all tell me we have to treat positive numbers of recent months with caution.
"They are all worried that pent-up demand has been used already and that the negative factor in the media will put a dampener on those green shoots."
Burnham disagrees, however: "My view is that we've had the corporate recession. The private sector has taken the pain, realigned itself, and it is in better shape and, I think, showing some fighting spirit and coming back this year."
The danger of the double dip will be in consumer sentiment and public consumption, which will have indirect influences on corporate travel. "To a large extent, whilst it may be reasonably flat I don't think it's going to deteriorate," he said.
Where the deterioration will occur will be in the public sector. Inefficiency will be removed, which will affect leisure travel. "Probably volume leisure rather than the quality end of the leisure market," said Burnham. "I don't think it's going to affect corporate travel that badly."
According to Moisan, the sharp rise in demand seen in the second quarter is likely to flatten out.
"When we do year-on-year comparisons, we have to bear in mind the comparable period last year wasn't linear. The first semester last year was a disaster... an absolute blood bath.
"Targets to grow year on year get harder because the second half last year was improving," he said.
The second quarter trasaction figures will also have been affected by unusual events said Moisan, as well as pent-up demand.
"In that quarter you had the football, the elections, the strikes and the ash cloud. There will have been a lot of rebooking and cancelling activity. Those four events are non-recurring," said Moisan.
"There will have been a bit of pent-up demand," he added, "but we've already seen it. We would have seen it in the tail end of the second quarter and in the early days of July."
Transactions will continue to rise, he said, but "it will be tougher to sustain the same rate of figures"
The increase in transactions revealed by the GTMC survey have been mirrored with an increase in yields, according to Scott Davies from Amadeus, although less so in the UK than elsewhere.
"The yield increase seen recently is a very encouraging sign of economic growth," he said. "As far as continuing yields, it's very competitive out there and as demand increases inevitably that recovery in yields will slow."
He predicted business travel would continue to increase, however. "Stronger businesses are thriving and surviving and bolstering their sales activity with travel... All the signs we are seeing are for an encouraging steady recovery."
With hotel transactions up, hoteliers are also feeling more confident.
Mark Willis, regional director of Radisson Blu in the UK, said: "There's a much more positive feel about business, [although] I'm not suggesting that business is returning to normal, or that average house rate is returning to normal."
Willis said room rate is likely to grow in the coming months, but in negotiations for future corporate deals Radisson would be "remaining flexible and keeping an open mind with regards to our key customers".
Going into September, Willis said he hoped to see a pickup in meetings and events spend.
"It will be interesting to see how things look after the summer, as we go into what is historically a very busy period of meeting and events, and I look forward to some kind of normality returning there," he said.
www.macintyrehudson.co.uk www.travelport.com www.amadeus.com www.radissonblu.com