Featured Sector: Hotel and Leisure

Hotels & Leisure Construction (£ million)

Underlying value of construction projects starting on site. (Excludes individual projects of more than £100 million and framework agreements).

In many ways, the sector has endured a difficult few years. Consumer spending has been squeezed by rising unemployment, high inflation, low earnings growth and, latterly, an economy struggling under the weight of significant fiscal retrenchment. This has hit demand for leisure facilities over the past three to four years.

The international slowdown caused foreign visits to the UK to drop. Though the number of people coming to the UK on holiday remained flat, the number of business trips dropped significantly. Overall, the growth in earnings from overseas visitors to the UK dropped below inflation in 2008 and has remained flat.

The sector has struggled throughout most of 2012 and despite a few months of growth in starts we expect underlying starts for 2012 to be below the level recorded in 2011 by 5%.

However, the sector has enjoyed a boost from the publicly funded Olympic related building. The number of planning approvals and starts has increased over 2010 and 2011, and we anticipate this will lead to an increase in completions during 2012. There has already been a small increase in completions over 2011, but the pace is expected to quicken this year.

However, now that all of the Olympics have been completed, the sector will have to make do without this implicit government support. Though there will still be projects relating to the Glasgow commonwealth games in 2014, the scale of spending will not be the same.