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The Economic Outlook and the Subsequent Effects on the Hospitality and Leisure Sectors

The hospitality and leisure industry incorporates sectors which range from restaurants and hotels to sport, leisure, tourism and travel. The industry is without question consumer driven and with so much choice it has become a very competitive space. Brand strength and effective communication channels are becoming more important than ever. The industry is progressively engaging with digitally active consumers who expect a more personalised experience through the developments in technology and social media.

The industry is striving towards Darwinism but it can only offer what the consumer is willing to pay for and the other thing we must be mindful of is that the performance of the hospitality and leisure industry has a direct correlation to the economy. To get a better understanding of the industry outlook we need to develop an improved understanding of how the economy affects the consumer. The Eurozone endeavours in its struggle to stand up, however for the first time in eight years all Eurozone countries are expected to grow, supported by ECB’s stimulus of at least £834bn through Quantitative Easing The UK growth forecast is set to be 2.6% this year, partly due to an increase in real wage growth and decreasing levels of unemployment. Inflation continues to be a moderate 0.5% as we feel the effect of lower oil, food and energy prices which feed through to consumers. The European Commission has upgraded its growth forecast despite the political uncertainty in Greece. The UK economy is looking positive for both consumers and companies as low interest rates mean cheap money, allowing consumers to spend more on discretionary purchases including leisure pursuits as well as eating and drinking out. This in turn encourages investment and expansion of businesses in the sector. Britain’s “eating out” sector continues to move into more positive territory with an increase in consumers dining out in comparison to the same time last year. Further gains are anticipated in the hotel sector with industry players seeking to capitalise on cheap money as well as attracting significant investment from Asia. London in particular, continues to be an investment hot spot for institutional and private wealth. The total volume of hotel investment transactions in the UK increased by 90% in 2014. The leisure & hospitality sectors are dependent on consumer confidence………with new openings popping up both in London and provincially, it suggests investors and brands are seeing the effects of an increase in that confidence and the resultant spending. The key players are satisfying the more discerning, post-recession consumer by offering a more innovative, quality and value led proposition. Examples of this would include companies such as @CerealKillerUK @Ceviche and consumers should continue to reward them! If you are considering expanding your business or are interested in unique opportunities within the hospitality & leisure sectors then please get in touch.


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