The H&L sector has done well to adapt to a rapidly changing environment. It's still all to play for though, and evolving further to meet consumers’ desires for experiences and activities such as competitive socialising, will enable businesses to seize further growth opportunities.
Head of Hospitality and Leisure, Barclays Corporate Banking
The 'experience economy' is the total amount that UK consumers intend to spend on memorable events and experiences. From competitive socialising to unique accommodation or ‘destination’ restaurants - there's an opportunity for many H&L businesses to benefit from a slice of a £178bn* opportunity this summer by adapting to changing consumer demand.
By understanding consumer behaviour and spending patterns, H&L businesses can evolve to provide five star experiences each and every time.
Find out more about the methodology of our business and consumer research here .
Proportion of consumers expecting to spend more on experiences by region
Our research suggests businesses confidence among H&L businesses is being spurred by rises in both customer numbers and consumer spending.
62% of H&L businesses report an overall increase of customers in the last year. With respondents most likely to report an increase in customers celebrating special occasions (67%), followed by more customers from within the local area (62%) and more groups of customers (61%). This reflects a wider trend among consumers for more shared experiences.
Our UK Consumer Spend Report1 shows the British public are spending more when it comes to certain H&L activities. Spending on entertainment, such as concerts and theatre shows, is currently up 6.5% year on year; while spending on travel is up 11.6% year on year. Overall, the report reveals that spend on H&L activities in general is up 7.3% year on year (as of March 2024).
According to our research:
According to our research:
of UK consumers expect to spend an average of £1,028 on holidays in the UK this summer.
of UK consumers expect to spend an average of £2,047 on holidays abroad this summer.
of UK consumers expect to spend an average of £1,372 on sporting events this summer.
of UK consumers expect to spend an average of £1,029 on live entertainment this summer.
How much consumers are planning to spend on the following leisure activities, according to our research:
| LEISURE ACTIVITY | % UK CONSUMERS EXPECT TO ATTEND THIS SUMMER | AVERAGE AMOUNT UK CONSUMER EXPECT TO SPEND THIS SUMMER |
| Holiday(s) in the UK | 77% | £1,028.89 |
| Holiday(s) abroad | 68% | £2,047.51 |
| Sporting events | 46% | £1,372.27 |
| Live entertainment | 64% | £1,029.29 |
| Music festival(s) – UK or abroad | 38% | £682.30 |
| Community events including local fairs and markets | 73% | £356.37 |
| Culinary experiences including food festivals, wine tasting | 49% | £321.07 |
| Beach or seaside trips | 77% | £198.66 |
| Eating at unique or memorable restaurants | 65% | £192.26 |
| Relaxation and wellness | 44% | £183.17 |
| Amusement activities including theme parks, zoos, aquariums | 53% | £158.89 |
| Competitive socialising including bowling, escape room, darts | 45% | £153.56 |
| Creative and craft activities | 39% | £147.09 |
| Outdoor activities including walking, hiking, camping | 71% | £141.00 |
| Cultural outings including museums, exhibitions | 66% | £116.02 |
| Trips to the cinema | 60% | £111.54 |
According to our research, holidays top the list for consumers when it comes to how much they expect to invest in experiences, with staycations and trips to the seaside being the most popular memorable experiences consumers intend to spend their money on.
With consumers increasingly willing to spend on holidays that deliver experiences in particular, providers may want to consider how they can add experiences to their current offering. That may include partnering with other local businesses to deliver activities such as tours of local areas, wine-tasting or physical activities. Developing holiday sites to include activities such as kayaking, paddle boarding, tree walking, and cycle paths may also help meet consumers’ growing needs for activities. Watergate Bay Hotel's take on a modern beach holiday with a range of activities available offering a great example. The aim is spurred by an evolving vision of 'a ski resort on a beach'; whether paddling out into the waves, floating in Swim Club, or tasting through the Bay’s four restaurants, staying at Watergate Bay is all about striking the right balance.
Memorable experiences can also reflect something more personal. Our consumer research shows that 22% of consumers are more likely to splurge on experiences and events during special occasions or milestones. This is supported by our research of H&L businesses, which reveals an overall increase of 67% in customers celebrating special occasions.
“Family occasions are becoming much more important to people – and there’s a real sense that they want those birthdays, anniversaries and other celebrations to deliver experiences to remember, whether they take place at a restaurant, on a holiday or at a bar,” adds Rich Robinson. “Businesses such as Tenpin are great at building birthdays into their marketing and their offering. There is a real opportunity for H&L businesses to deliver on consumer needs to create unique memories that can’t be made at home.”
Many businesses are already alert to these opportunities: 93% of H&L businesses recognise there is greater demand for personalised experiences and 41% are expanding options for customers to personalise their experience.
Having appropriate CRM systems in place to capture customer data, such as significant dates including birthdays and anniversaries, will allow businesses to deliver a more personalised approach when promoting their offerings to consumers, see how Tenpin are doing this here.
Some 92% of H&L businesses say sporting, cultural and entertainment events will create opportunities for them to engage new customers in the coming year.
Ahead of a big UK summer of sport with the Olympic Games and men’s European Football Championships in 2024, H&L businesses are presented with another considerable opportunity: 91% of H&L businesses surveyed say that demand for their products and services is higher during sporting, cultural and entertainment events.
There are certainly examples of the impact major events can have on local businesses in and around those events. According to Rohan Kumar, Head of Client Insights, "During the Beyonce concerts at the Tottenham Hotspur Stadium in London 2023, spending in the immediate area – specifically the Tottenham High Road, was 2.4 times usual figures”.
Our research suggests that consumers will spend just under £1bn to attend the Taylor Swift Eras Tour with UK fans planning to spend an average of £848 each on the experience across tickets, travel, accommodation, outfits, and more.3
H&L businesses are adapting to change, with 26% intending to reshape their offering. This may include diversifying from their core offer by adding extra activities on-site to increase dwell time and keep customers coming back.
Tenpin, for example, have moved beyond just bowling to include arcades, pool and karaoke rooms in their venue, while also focusing on providing food and beverage packages to increase spend. “The friendly and welcoming bowling centres of today couldn’t look more different, aside from having lanes, pins and bowling balls.” says Graham Blackwell, CEO at Tenpin.
Crucial to building customer loyalty is the power of technology – with data exchanges and loyalty schemes often delivered through apps that provide rewards for use or increased custom. To this end, 23% of businesses have either added, or plan to add, robust CRM tools to offer more personalisation to customers.
We’re seeing a more innovative approach being taken so consumers can see the ‘fair value exchange’ that is taking place – and recognise the reward they receive in return for their information. Technology plays other vital roles, too, with further opportunities available from mobile apps, personalisation, data analytics and contactless payment options.
To reduce costs and keep customers coming back, H&L businesses are increasingly turning to special offers – with 32% saying this will be their core strategy this year. However, we are seeing a maturing of these activities, with businesses focusing on building up customer loyalty and repeat business.
We’re seeing innovative strategies being used in the market to drive loyalty including bottomless brunches, value lunches whereby customers receive a discount for a data exchange, and brands such as Incipio’s ‘The 411’ London bar are having a bit of fun with its Wall Street Wednesdays, where it caters specifically for the stockbroker crowd by pricing drinks according to demand throughout the night4. Dynamic pricing is becoming more commonplace as a way of flexing pricing depending on demand.
H&L businesses are becoming increasingly focused on price optimisation and yield management to drive consumer footfall and spend.
For example, menu re-design or simplification where a set menu sits alongside an à la carte offer or small sharing plates are offered which allow consumers to choose as much or as little of what they want. Some are employing an approach called “price laddering” or the inclusion of a well-priced hero dish sitting alongside other more expensive options.
This together with gluten-free and vegetarian options allows H&L businesses the opportunity to cater for all, providing choice and inclusivity which are important in the decision making process of the consumer particularly where groups are concerned.
In light of the current environment, the key concerns for those who took part in our research are energy and property costs; 35% of H&L decision-makers say the price of utilities is their biggest concern moving forward and a similar number of H&L businesses (34%) cited property costs, including rent and rates, as their biggest concern.
Businesses need to think about how to deal with this going forward and juggle the fact that, in many cases, city-centre locations often mean higher costs, but also greater footfall; hotels are a good example as room rates can be varied on a daily basis to reflect inflation or demand drivers, such as an event being held locally. When considering location, London for example appears to be one of the areas which consumers expect to spend more on experiences.
“Hospitality businesses in the UK also pay a higher rate of VAT, compared to European neighbours. The UK’s 20% rate of VAT is much higher than countries like France, Greece and Spain, who are direct competitors” explains Kate Nicholls, Chief Executive, UKHospitality.
It’s important to consider the cost-to-value ratio here, as although consumers are willing to pay more for a memorable experience, it’s important to get the balance right. Regardless, property costs could continue to be an issue for some, and businesses are likely to continue to be vocal around rent and rate relief measures as they look to deal with the challenge – with many feeling that current legislation and rate structure does not go far enough.
In the past year or this coming year, nine in ten (90%) H&L decision makers report having or planning to invest either in upgrading their premises or acquiring new premises – a considerable jump on last year’s figure of 80%, suggesting this has become a far greater priority.
“This is likely to be a key agenda item for the industry as we move forward,” explains Gareth Jones, Head of Large Corporate Lending, Barclays Corporate Banking. “It's great to read that more businesses are thinking about upgrading or acquiring. Investing in the quality of premises should translate into an improved customer proposition and we’ve enjoyed seeing the results when supporting operators with finance to help them achieve these goals”.
Business rates, in particular, continue to be a challenge. This is particularly true for hospitality businesses, which pay significantly more in business rates as a proportion of turnover than any other sector. Some relief remains in place, with small hospitality businesses benefitting from business rates relief, up to a £110,000 cap. However, two-thirds of the sector’s trade is not eligible for relief. Rates have also increased for higher-trading properties from April, rising at an above-inflation rate. Analysis by UKHospitality showed that this represented a total £224m cost for hospitality businesses.
Chief Executive, UKHospitality
According to our research, 97% of businesses say that Environmental, Social and Governance (ESG) is important to their customers in the current economic environment and over the last year have been focusing on building more sustainable supply chains (47%) and more sustainable infrastructure (46%).
Our research also shows that over the next two years, investment in ESG focused initiatives continue, with the focus shifting to the wellbeing of workforce 40% and working towards BCorp status or equivalent, (34%, up from only 4% who did so last year). For example, Watergate Bay are currently going through an assessment to become B Corp certified, and states that "this will balance profit with people and planet – reaching the highest environmental and social standards". Ben Harper, CEO at Watergate Bay Hotel says “Far from a tick-box exercise, becoming a B Corp will fundamentally change the way we do business – and we’ll be legally required to report on our impact every year.”
Far from a tick-box exercise, becoming a B Corp will fundamentally change the way we do business – and we’ll be legally required to report on our impact every year.
CEO, Watergate Bay Hotel
Although some recruitment and retention challenges seem to be easing, from the extreme highs we saw directly after the pandemic, 23% of respondents from our research say it's still one of the biggest challenges they are facing.
Kate Nicholls, Chief Executive, UKHospitality says “According to the Office for National Statistics, there are currently 102,000 vacancies in accommodation and food services. This is down from the height of 176,000 in the months after the pandemic, but remains higher than pre-pandemic vacancies of 86,000. Vacancies continue to prevent venues operating at full capacity, and combined with additional staff costs, this presents a challenging situation for businesses. Vacancies in May were 23% lower than a year previously.”
Our research suggests 55% of H&L businesses are comfortable with their recruitment and retention position at present, showing some positivity. It's an ongoing upward trend from our 2023 report – when we first saw that issues surrounding recruitment and retention began to ease after the challenges of the pandemic.
As businesses look to ensure the positive outlook on recruitment and retention continues, it appears they are adapting their focus – and investing in their staff, including providing additional perks and benefits (34%), faster career progression (29%) and in-house academy apprenticeships and training (29%) – signifying a maturing of incentives, with businesses taking retention benefits to the next level.
Springboard’s work plays a key role in promoting hospitality careers to the next generation and giving people the skills and opportunities to secure work. Last year, Springboard trained 2,760 unemployed people, with 74% gaining employment in the hospitality industry and 76% still in work after 12 months.
CEO, Springboard
Chris Gamm, CEO at Springboard says “The best employers have been working hard to tackle long-term labour challenges by looking after their staff, supporting their wellbeing, paying a fair wage, reorganising shift patterns to ensure a better work/life balance, delivering quality training and development programmes and ensuring they follow good employment practices as laid out by the likes of the Hotelier’s Charter.
“New initiatives like the recent Skills Passport trials, delivered by UK Hospitality in partnership with Springboard and the Department of Work & Pensions, have also mapped out the core skills needed to be successful in entry level hospitality jobs and a road map for employers to follow to develop them right up to management positions. Initiatives like the Skills Passport will be crucial for attracting and retaining the workforce needed to thrive for many years to come.
With consumers looking for tailored experiences, businesses need to better understand what they want. Technology is king here. Use apps that capture feedback and preferences, and data exchanges whereby customers share information for a reward. Then look to see if a CRM system can help you build relationships with those customers beyond a one-time visit.
Keep a calendar of local and national events so you can deploy themed experiences around those or capitalise on the additional footfall they may bring. When is the European Football Championships and what will you do to attract a slice of the crowd? What local festivals might allow you to get out and grab the attention of new customers?
The turbulent economic period we have seen in recent years has impacted some more than others – so how will you cater for different audiences, such as those with surplus cash to spend and those who are more financially challenged? This is about how you can ladder prices and cater to the needs of different groups to expand your reach.
This report is based on bespoke market research conducted by Opinium Research on behalf of Barclays among businesses and consumers across the UK. The consumer sample of 2,000 general consumers (UK) was collected between 17th – 22nd April 2024. The business sample of 250 senior decision-makers in the hospitality and leisure industry, working in businesses with turnover of £6.5m+, was collected between 5th – 19th April 2024.
*The consumer research for this report was carried out between 17th – 22nd April 2024 by Opinium Research on behalf of Barclays. There were 2,000 respondents, providing a representative sample of UK consumers by age, gender, region, and income group.
To calculate total consumer spending, Opinium Research asked respondents to estimate how many times they plan to do different experience-led activities this summer (from June to September), and how much money they expect to spend on each visit, in order to calculate average (mean) consumer spending per activity per person this summer. Those numbers were then multiplied by the UK adult population (53,646,829 – Source: ONS^) to calculate total spending per activity, and then the activities were added together to reach a total figure of £178bn which equates to £3,322 per UK adult.
Please note that the £178bn estimate for total consumer spending does not equate to an uplift for the UK economy. For example, money spent on holidays abroad may benefit the economy of the holiday destination. Similarly, money spent on concert tickets for international artists may go to the artist’s home nation.
1Barclays UK Consumer Spend Report gives you a unique and up to date picture of the nation’s spending habits based on the actual transactions, bringing it to life so you can take action and shape your strategy. You can find the latest report here: https://www.barclayscorporate.com/insights/industry-expertise/uk-consumer-spending-report/
3https://home.barclays/news/press-releases/2024/05/it-s-a--love-story---taylor-swift-s-eras-tour-to-provide-nearly-/
4https://www.the411london.co.uk/event/wall-street-wednesdays/^
With 54 locations across the UK, Tenpin is one of the most familiar bowling brands , offering everything from bowling, laser tag and arcades to escape rooms and soft play – all with an on-site food and drinks service.
Your next steps
Behind every door is a different opportunity. Explore fresh perspectives and insights.
We provide a complete spectrum of solutions to enable your business to transact and trade easily, manage risks efficiently and finance its plans for growth.
To discuss your business requirements and how Barclays can support you, contact us today.
