Featured Sector: Hotel and Leisure

Consumer spending in recent years has been squeezed by rising unemployment, high inflation, and low earnings growth, hitting demand for leisure facilities over the past four years hard. However market conditions are improving, with inflation falling in recent months and early signs of wage growth.

In addition the hotel sector has been resilient through the downturn, helped by domestic tourism and more recently, growing demand from overseas. The number of visits to the UK by overseas residents rose by 6% during 2013, with spending by overseas residents increasing by 12% over the year. Growth in visits was equally strong for those travelling for business or holiday. This is much stronger than the 1% growth in overseas visits in 2012, despite the draw of the London Olympics. Visits from countries outside Europe and North America rose by 10%, and continuing to draw tourists from countries with emerging middle classes, such as China and Brazil, will be a key challenge and opportunity for the UK tourism industry.

In addition consumer surveys have shown that the number of UK consumers who expect to have more money to spend in 12 months’ time is increasing, though the balance still expect their situation to be worse than currently. This means that existing operators are unlikely to see a significant upturn in their fortunes in 2014, but will encourage developments ready to open in 2015 when spending power is likely to have strengthened