Hospitality and leisure expected to contribute an additional £3.5bn to UK economy
New research by Barclays Corporate Banking reveals that the hospitality and leisure industry is thriving again and could contribute £3.5bn more to the nation’s GDP this year than in 2019.
In a new thought leadership report published today, Leisure Rediscovered, Barclays’ data shows that the vast majority of hospitality and leisure businesses (94%) are confident about their growth prospects for this year following a post-lockdown surge in trade. Based on projected sales figures for the period from April to December 2021, when the hospitality sector has largely been open again, this equates to £3.5bn more in Gross Value Added (GVA) than in the equivalent period in 2019.
The research reveals new patterns in the way people are accessing hospitality and leisure services and changing consumer habits. For example, although restrictions on foreign travel have eased substantially in the past couple of weeks, staycation tourism could be here to say with nearly half (45%) of consumers prioritising UK holidays over those abroad. The most popular destinations are the Lake District, the South West of England and the Scottish Highlands.
Barclays Corporate Banking estimates that, if a preference for UK holidays continues at the same rate in 2022, it will add up to £9.2bn to the domestic tourism market.
The report also shows that significant numbers of consumers are prioritising hospitality and leisure products that are offer health and wellbeing benefits, strong sustainability credentials, or which come with particularly strong safety and hygiene standards.
On average, consumers are prepared to pay 19.9% extra for healthier food and drink options, and 17.8% for holiday accommodation that includes health and wellbeing services such as a gym or spa. More than nine in ten (91%) of hospitality and leisure operators are now prioritising ‘healthy’ products among their portfolios.
While eating out or drinking, those aged 16 to 24 would be prepared to pay a premium of 35%, on average, for products with strong sustainability credentials. The average premium for 25-to-35-year-olds is 30%. Meanwhile, a sustainable holiday experience is worth 39% more to the youngest group, and 32% for 25s-to-35s.
Unsurprisingly, many consumers are expressing strong preferences for services that are safe and hygienic. In fact, customers would pay an extra 20%, on average, to eat and drink in venues with particularly strong standards. The 16-to-24 age group would pay an average of 39% extra, while those aged 25 to 35 would pay 33% more.
Mike Saul, head of hospitality and leisure at Barclays Corporate Banking, commented: “After a very difficult period for the hospitality sector, it is great to see how well the sector has bounced back. Our findings show an industry brimming with confidence and buoyed by surging revenues.
“However, it is also an industry that is undergoing a substantial amount of change – from the customers it serves to the products it sells. We have uncovered strong evidence that, particularly for younger customers, operators will need to place increased focus on healthy, sustainable and safe product ranges and to maintain investment in data and technology. Whilst the industry is navigating some short-term challenges around supply chains and labour shortages, operators that prioritise these areas will be an incredibly strong position for the long-term.”
Other findings from the Leisure Rediscovered report show that:
- · Tech is a firmly rooted part of the sector’s proposition: 36% of businesses are earning more from ecommerce than ever
- · Collaboration is one of the big success stories of the pandemic, with 88% of operators now joining forces with their local peers to share data and offer joint deals
- · 42% of spas are seeing more men come through their doors and more younger customers are using holiday lets (47%) and holiday parks (40%)
- · The lure of local hospitality is strong: 41% of consumers say they are now more drawn to go out for entertainment in their local neighbourhoods than further afield
- · The delivery boom has not subsided since the pandemic, with four in ten businesses reporting continued popularity of home delivery and click-and-collect services