UK leisure sector dips but foreign holidays take off

By Deloitte
Published: 11 August 2017

Spending in the UK leisure sector fell slightly in the second quarter of 2017, as consumers became more cautious, according to the latest findings from the Leisure Consumer Q2 2017 report by Deloitte.

The quarterly survey of 3,000 UK adults found that the outlook for the leisure sector is less certain, with spending falling across all leisure categories compared with the second quarter of 2016. Restaurant spending saw the largest year-on-year decline, falling by seven percentage points.

The quarter-on-quarter picture is similar, particularly for areas of discretionary spending such as eating and drinking outside of the home. Spending in coffee shops and restaurants both saw a quarterly fall of four percentage points, while spending in pubs and bars saw a decline of three percentage points from the first quarter of 2017. In-home leisure, which includes takeaways and TV, film and music subscriptions, also saw a decline in spending, down two percentage points from the previous quarter. Significantly, amongst millennial consumers (18-34 year-olds) in-home leisure spending fell by 12 percentage points

Simon Oaten, partner for hospitality and leisure at Deloitte, comments: “There has undoubtedly been some loss of momentum in the leisure sector during the second quarter of 2017. Weak consumer confidence, driven largely by rising inflation and lower real wage growth, has led to household austerity measures which have particularly impacted restaurants, cafés and bars.

“It would appear that we are now beginning to see the same shift from discretionary to essential spending in the leisure sector that we have already seen in the retail market. Leisure consumers are switching from discretionary, experience-led activities in order to protect their everyday leisure spending such as their daily coffee or TV subscription. The question for the UK leisure sector is: can the leisure consumer continue to protect their leisure spending even as prices on the high street start to rise?”

Holiday spending
Holiday spending was one of the only discretionary leisure areas which saw an increase in spending in the second quarter. Long haul spending increased by four percentage points, while short haul spending increased by three percentage points from the first quarter of 2017. Spending on going to the gym also saw a one percentage point increase from the previous quarter.

Consumers remain committed to spending on holidays over the next three months, with the majority of age groups intending to spend more on holidays in the third quarter of 2017 compared to the previous quarter. Consumers aged 35 and over are expecting to spend more on both long and short haul holidays in the next three months. By contrast, millennials are planning to decrease their spending on short haul in the next three months, by four percentage points.

Oaten adds: “While spending on holidays was up quarter-on-quarter, the longer term trend shows that is has fallen year-on-year. These are the first signs of a weakening in consumer confidence with regards to holiday spending, and it remains to be seen whether this proves to be a blip or the start of a prolonged slowdown that echoes what we have seen in other areas of the consumer market.”