Hospitality & Leisure benefits from return-to-office workers as the experience economy continues to fuel growth
Barclays Business Prosperity research into the performance and outlook of the Hospitality and Leisure (H&L) sector reveals that business optimism has been buoyed by after-work footfall increasing due to workers returning to the office.
Two fifths (41 %) have noticed an increase in post-work footfall in the last year while a third (35 %) report that weekday lunchtimes have become busier.
A further 37 % have also noticed an uptick in “bleisure” activities, where customers combine business with leisure, highlighting an evolving trend that is contributing to a rise in spending.
While overall consumer spending has remained muted in many sectors amidst the rising cost of living, the H&L sector has continued to perform strongly, outpacing growth in other non-essential categories since April 2021.
Experience Economy takes centre stage
Increased footfall is combined with an ongoing shift of consumers prioritising spending on events and entertainment over material goods, commonly known as the “experience economy”.
One in four UK consumers (24 %) plan to spend more on memorable experiences and events this summer compared to last year, and 63 % would rather talk about something they did than something they bought3.
These insights are supported by Barclays Consumer Spend data which shows that average monthly spend on entertainment has increased 17.3 % since January 2020, while spending on entertainment and travel has consistently outpaced retail in the past four years.
In an attempt to expand their offerings, four in five (83 %) H&L businesses are investing in consumer experiences. Of this group, 52 % are implementing tech to make their offering more experiential, and 51 % are introducing competitive socialising. Almost half (46 %) say revenue has increased due to this investment.
Challenges remain
Despite many H&L businesses feeling confident in their ability to grow over the next twelve months, challenges that remain amidst the current economic backdrop include energy costs (34 %), tax costs (34 %) and tariff increases (30 %).
To help mitigate macro business pressures and boost sales two fifths of H&L businesses (40 %) are making use of special offers and promotions, 36 % are expanding distribution channels, and 26 % are extending their opening hours.
Rich Robinson, head of hospitality & leisure at Barclays, said: “Hospitality and Leisure businesses are benefitting from increased footfall as more workers return to the office which, combined with the rise of the experience economy, is contributing to optimism for future growth prospects.
“It’s no longer just a trend that consumers are choosing memories over material goods – our data shows it’s a fundamental shift in how they determine their financial priorities. Hospitality and Leisure businesses are able to capitalise on this and play to win by delivering unforgettable experiences for customers.”