Featured Sector: Hotel and Leisure

Consumer spending over the past five years has been squeezed by unemployment fears, high inflation, and low earnings growth. Consumers’ discretionary spending in leisure related areas has been especially hard hit by faltering consumer confidence and constrained household budgets. However market conditions are improving, with inflation falling in recent months, strengthening employment and real average earnings growth over the last year.

A loosening of consumers’ purse strings in response to the brightening outlook should lift leisure operators’ revenues during 2015 and will encourage developments ready to exploit a further strengthening in spending in the years ahead.

The prospects for the hotel sector are positive, based on improving numbers of business travellers and visitors from overseas. Competition for market share between hotel chains is expected to drive expansion in construction workloads over the next two years.

Accordingly, the sector has picked up momentum over the last year. New starts rose year on year in each quarter of 2014, with 2014 as a whole seeing a 20% rise in the underlying value of starts. While the sector did suffer a fall in starts during the three months to May, it has not been hit as hard by a pre-election stall as the office and retail sectors. Further double digit growth is forecast for the current year.