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    In March 2007 United Nations SecretaryGeneral Ban Ki-moon told a UN conerencein New York We have to change the waywe live, and rethink the way we travel.

    The travel and leisure sector must nowmeet that challenge.

    February 2008 Issue 17

    Here to stay:

    sustainability in thetravel and leisure sector

    Hospitality and LeisureHospitality Directions Europe

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    over more than $10 billion. Andwhile 39 per cent o respondentswere concerned about potentialdisruptions to their supply chainsrom extreme weather and othersimilar events, 28 per cent sawclimate change as an opportunityto reduce their costs or generateadditional prots rom newenvironmentally-riendly productsand services. Another 29 per centbelieved that an active commitmentto take action on climate changewill bring important intangiblebenets, either or their brands, theircorporate reputation, or their abilityto attract the best talent.

    Its increasingly clear that asgovernments try to orce thetransition to a low carbon economythere will be new regulatory andtax measures that all companieswill ace, regardless o their sector.Costs will rise as a more realisticprice o carbon is imposed throughmechanisms like the EU cap andtrade scheme, and other resourcesthat have traditionally been eitherree or too cheap will have to be

    bought and valued at a market rate.There will have to be drastic cutsin waste and packaging, and in theuse o chemicals, water and power.

    But as the Stern Review alsopoints out, there wont just becosts but business opportunitiesas the markets or low-carbon,high-eciency goods and servicesexpand. As the PwC CEOsurvey suggests, the more agilecompanies and sectors will do this

    by predicting and meeting new

    demands, creating new productsand services, or simply by turningtheir ethical and environmentalcredentials into competitiveadvantage. In some sectors thisis already happening: cars are anobvious example, but look also atthe growth in demand or organicand Fairtrade ood, at the rise ogreen energy, or at what Marks &Spencer is doing with its 200mPlan A sustainability programme.

    So what does all this mean or thetravel and leisure industry? Andhow can companies in the sectorstart to make headway on what mayseem to be intractable problems?

    Air pressure

    The rst and most obvious issue orthe industry is the carbon cost o airtravel. There is still no agreementon a global emissions tradingscheme or aviation, but in themeantime the EU is proposing toinclude the industry in the EuropeanEmissions Trading Scheme rom2011, and airlines need to start

    planning or this now. According toReady for Take Off3, a PwC surveyconducted in 2007, most operatorsare expecting this to result in highercosts, but ew believe they will beable to pass those costs throughto passengers. And the numbersin question are considerable. Anindustry-led study by York Aviationin 2007 put the cost o emissionsreductions at 45 billion or thedecade between 20112020, whichwould in turn cut aviation prots by40 billion.

    Here to stay Sustainability in the travel and leisure sector

    Climate change has aected ourbusiness expectations rom both a short-and long-term perspective. For example,new commercial aviation regulationsthat seek to reduce the emission ogreenhouse gases could lead to areadjustment o the supply and demandequation or this means o transport.

    Raael del PinoChairman, Ferrovial GroupResponse to the PwC Annual GlobalCEO Survey

    3 Ready or Take-o? The inclusion o aircrat operators in the EU Emissions Trading Scheme, PricewaterhouseCoopers 2007

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    Here to stay Sustainability in the travel and leisure sector

    Part o the problem here is thatthe sector has relatively ewoptions that can make a signicantdierence, at least in the immediateuture. The three cited most otenby respondents to Ready for TakeOffwere more ecient aircrat,new technological developmentsin areas like jet uel, and betteruse o spare capacity. As TomJenkins, executive director othe European Tour OperatorsAssociation has said, What weneed is much more enlightenedthinking that simultaneouslystimulates a reduction in carbondioxide emissions and an increasein productive innovation. The

    ocus should be on technologicaladvancement and alternativesources o uel rather than punitivetaxation that will destroy theeconomy.

    But technological advances tendto have a very long timescale, ithey can be achieved at all: loweremission uels are being developed,but may not reach the market or 20years. Additionally, controversy over

    the relative environmental impactso biouels versus traditional ossiluels means that this may not bethe perect solution it may haveseemed. In the long term newand lighter materials could makethe biggest dierence by reducingaircrat weight, but these are evenurther o. In the interim manyoperators will have to rely onmaking the smaller improvementsthat can be realized rom better loadactors, and encouraging carbon-

    o-setting.

    As the box below suggests, moreand more airlines are oering theirpassengers the chance to oset theemissions generated by their fights,but some observers say that thebenet is marginal at best, and doesnot take into account the crucialact that emitting CO2 and nitrogenoxide at high altitude causes atleast twice as much damage as atground level. And while the sectorscontribution to global carbonemissions is as yet relatively low ataround 3 per cent, this gure nearlydoubled between 1990 and 2005and aviation is now Britains astest-growing source o CO2 emissions,which may cancel out the hard-won

    reductions being demanded o otherindustries.

    Flying light

    Most o the big airlines now givetheir passengers the chance tooset the carbon generated ontheir fight. The trend was setby BA in 2005 and they havenow been ollowed by the likeso Qantas, Virgin, Easyjet, Air

    France, SAS, Luthansa andCathay Pacic.

    Other airlines are even moreambitious. In July 2007 KLMRoyal Dutch announced plans toachieve CO2-neutral growth bymodernizing its feet, reducingits uel use, and osettingour million tonnes o carbonin the next our years throughinvestments in WWF sustainableenergy schemes. NetJets,Europes largest private jet

    company, has set itsel the goalo becoming completely carbonneutral by 2012, and Sir RichardBranson is ploughing all theprots and dividends his groupmakes rom Virgin Holidays,Virgin Atlantic and Virgin Trainsinto research and investment todevelop sustainable sources oenergy. That could amount to$3bn over the next 10 years.

    Permit to travel?

    Whatever happens in the air, climatechange will bring other morelong-term actors into play or thewider hospitality sector. Changing

    weather and temperature patternswill make some parts o the worldmore attractive and others less so;more requent fooding or droughtmay threaten destinations that havebeen popular choices in the past;and pressure will build or moresustainable approaches to waterand energy, especially in relation toair-conditioning, swimming poolsand laundry. The 2007 AmericanExpress Hospitality Monitor ound

    that almost hal o the 300 Europeanhotels they surveyed had set targetsto reduce energy consumption, butew had done more to implementthis other than oering not to washthe towels every day. Some werestarting to use energy ecientlight-bulbs and more were makingthe eort to recycle waste, but theoverall impression was that relativelylittle was being done, and a greatdeal more could be achieved.

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    The more cynical industry commentators point to theact that only 7 per cent o passengers have oset theirfights so ar as evidence that consumers will be slow tochange their behaviour, i they do it at all, and as suchthe costs o improving environmental perormance arelikely to outweigh the benets. In a similar vein, recentcustomer research by Starwood Hotels and Resortsound that over 60 per cent o people are more wasteulo hotel water and electricity because these thingsare perceived to be ree. And despite years o politediscouragement 75 per cent still wanted their towelsand sheets changed every day.

    But those in the opposite corner can cite recentsurveys by the Green Hotel Association, which oundthat up to 43 million US travellers are concerned aboutgreen issues in the hospitality industry, the TravelFoundation, which indicated that only 4 per cent o UKholidaymakers would opt or a ve-star hotel rather thana our-star one with a better sustainability perormanceand Travelocity, which ound that nearly 80 per cent otravellers would be willing to pay extra to visit an eco-riendly destination or business. Moreover, 75 per cento respondents to a Travel Mole survey in 2007 said

    they would be prepared to oset their travel-relatedemissions once they understood the impact they werehaving on the environment. 43 per cent chose evenmore radical options, such as imposing new carbon

    taxes on the cost o fying, or opting or more neutralorms o transport. Its no surprise, then that both VirginTrains and Eurostar are now promoting themselves onthe basis that letting the train take the strain is greenerand cleaner than going by air, or that VisitBritain isdeveloping a sustainable tourism accreditation scheme.

    It may be that consumers really are going to beprepared to buy green holidays as well as greenhousehold goods, but an even more immediatecommercial threat may come rom changes in attitudesto business travel.

    A discussion o the companys carbon ootprint isnow a de acto requirement or any business issuing aCorporate Responsibi